![]() ![]() This inventory analysis method considers how scarce an item is and how easily you can acquire it.You’ll calculate beginning inventory at the start of an accounting period.īeing able to compare beginning inventory period over period can provide insights into business performance, such as inventory turnover and the value of your inventory. To learn more about LIFO, FIFO and other cost accounting methods, read The Key to Using Inventory Cost Accounting Methods in Your Business. In First Expire, First Out (FEFO), expiration dates drive the sales, with companies exhausting the stock with the earliest expiration date first. FIFO companies sell the inventory first that they bought first. LIFO companies sell the inventory first that they bought last. The accounting cost of inventory also depends on whether a company uses Last in, First Out (LIFO) or First in First Out (FIFO) accounting. Often used in manufacturing, this analysis measures the inventory based on high, medium and low cost.
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