Question

what would change if we use fifo method?

Answer 1

Explanation
FIFO method is a method of inventory management where inventory which comes first in goes out first (i.e first in first out t)

Changes that occurs when using fifo method over the other methods are as follows

1. The FIFO method allows to minimise Taxes when the prices of inventories is rising, as this method reduces (EBITDA )used for calculation of Taxes.
2. Using FIFO method helps in taking actual income and it reduces the risk of manipulation in income earned during the period.
3. FIFO method is also helpful in determining the cost of goods sold which is essential in determining the budgets.