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    Compare and contrast the effects of LIFO and FIFO inventory costing methods on earnings in an inflationary period

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    In detail, compare and contrast the effects of LIFO (Last-In, First-Out) and FIFO (First-In, First-Out) inventory costing methods on earnings in an inflationary period. Please include how these differences will affect the cost of goods sold, and the cost of sales on the balance sheet.

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    (Please see the attached file for the complete solution).

    LIFO and FIFO are inventory valuation techniques using in financial accounting to represent the amount of money that is tied up as inventory in a company's Balance Sheet and to also determine the 'cost of sales' or ' cost of goods sold' in the Income Statement.

    The FIFO (First-In, First-Out) system assumes that the unit that was purchased or produced first (inventoried first) is sold first. For example, if a ...

    Solution Summary

    This 344 word solution contrasts LIFO (Last-In, First-Out) Vs FIFO (First-In, First-Out) Inventory Costing Methods and their effect on earnings and a balance sheet. In addition to an in-depth written explanation of the differences, this solution also includes a table that simply illustrates the differences between the two methods.