ACC 205 WEEK 3 Discussion - Discussion 1 The controller of...

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Discussion 1:The controller of Sagehen Enterprises believes that the company should switch from the LIFO method to the FIFO method. The controller’s bonus is based on the next income. It is the controller’s belief that the switch in inventory methods would increase the net income of the company. What are the differences between the LIFO and FIFO methods? LIFO (last in first out) is a method that means the product purchased last will be sold first. FIFO (first in first out) is a method that means the older product purchased is sold first before the new product. FIFO is used more in stores that sale food items that have expiration dates. If they didn’t use this method, they would lose money because the product would go bad and they would have to through it out. LIFO is used more in stores that don’t sale products with expiration dates such as food. I believe it would not be beneficial for Sagehen Enterprises to switch to FIFO because with FIFO a company holds on to the

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