right, you have already got it correct to this point.
Further, though COGS is only an accounting thing in your Income Statement, but since it is an expense, more or less of it will determine your taxable income and hence your taxes. And, your taxes are a REAL cashflow.
So, if your COGS is higher under LIFO, your taxable income becomes lower and hence taxes (real cashflow going out) are lower. So your cash in hand is higher.
I'm going to give you the benefit of the doubt and assume that you aren't trolling.
1. If prices are rising then COGS will be higher under LIFO
2. If COGS are higher gross income is lower
3. If gross income is lower and taxes are a percentage of gross income you will pay less taxes under LIFO
4. Taxes are a REAL cash outflow
5. If the taxes (a REAL CASH OUTFLOW) are lower and everything else is the same then our total cash flows will be higher
2. If COGS are higher, gross profit and taxable income are lower
3. If taxable income is lower and taxes are a percentage of taxable income you will pay less taxes under LIFO
Super I Wrote:
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> Bankin' -
>
> Well said. The only technical tweaks I have is :
>
> 2. If COGS are higher, gross profit and taxable
> income are lower
> 3. If taxable income is lower and taxes are a
> percentage of taxable income you will pay less
> taxes under LIFO
发表于 2011-7-13 16:27
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