ACC205 Week 3 Disc 1 - The controller of Sagehen...

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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 net 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?What are the differences between the LIFO and FIFO methods?The Last-In, First-Out (hereinafter referred to as LIFO), and First-In, First-Out (hereinafter referred to as FIFO), methods are used to account for inventories. Under the LIFO method, the last unit added to an inventory is the first one to be recorded as sold, where the FIFOmethod is exactly the opposite in that goods are sold in the exact order in which it came into the inventory (Wainwright, 2012, Chapter 5.3). For example, when using the LIFO method, if Sagehen had a case of vegetables that was purchased for $25.00 last week and a case of the same vegetables was purchased for $30.00 this

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