What does andquot;LIFOandquot; stand for?a)Last In First Outb)Lease In For Offersc)Law In For Offersd)Lien In Fact OfCorrect answer is option 'A'. Can you explain this answer?

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CA Foundation Exam > CA Foundation Questions > What does "LIFO" stand for?a)Last I...

What does "LIFO" stand for?

a)
Last In First Out
b)
Lease In For Offers
c)
Law In For Offers
d)
Lien In Fact Of

Correct answer is option 'A'. Can you explain this answer?

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Verified Answer

What does "LIFO" stand for?a)Last In First Outb)Lease In For...

Explanation:

What is LIFO?: LIFO stands for Last In First Out.

Definition: LIFO is a method used in accounting and inventory management to calculate the value of inventory on hand. It assumes that the last items added to an inventory are the first ones sold.

Usage: LIFO is commonly used in industries where the cost of inventory items fluctuates frequently, such as the retail sector.

Example: If a company purchases 100 units of a product at different prices, under LIFO, the cost of goods sold will be based on the cost of the most recent purchases.

Comparison to FIFO: LIFO is the opposite of FIFO (First In First Out), which assumes that the oldest items in an inventory are sold first.

Impact on Financial Statements: LIFO can result in lower taxable income and lower inventory valuation on the balance sheet, compared to FIFO.

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What does "LIFO" stand for?a)Last In First Outb)Lease In For Offersc)Law In For Offersd)Lien In Fact OfCorrect answer is option 'A'. Can you explain this answer?

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