same method to account for COGS and Inventory correct, sometimes, companies, different, accounting

sharksfan

have been getting some questions confused when they ask for differences in LIFO, FIFO inventory, COGS, and these should not be confusing.
to confirm, companies can only use one method of accounting for COGS and inventory, correct?
guess sometimes get mixed up when they say FIFO COGS vs LIFO inventory and think they are using different methods to account for each.

thanks, john

rkapoor

couple more points -

IFRS doesn't allow LIFO

under GAAP, companies must use the same method entirely (either LIFO or FIFO) for tax and financial statement purposes.

- keep these in mind for LEAST likely/more likely type questions.






LIFO my FIFO.

Maddin

Right, you can only use one method. Just remember the two formulas and you should have any COGS or Inv question nailed.

FIFO COGS = LIFO COGS - Change in LIFO Reserve

FIFO Inv = LIFO Inv + LIFO Reserve