ACC205 - Week 3 Discussion 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 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? The LIFO and FIFO methods are used when estimating the cost of goods during a specific period when the goods were acquired at different prices. The FIFO (first-in-first-out) method assumes that the goods are sold in the order they were acquired and, therefore, the cost of goods sold will resemble the earliest purchase prices of the stock on hand. LIFO is the opposite. This method assumes your cost of goods sold

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