Question

Incase of Inflation under FIFO, the profit on goods
sold will be
More
less
average
no profit no loss ​

Answer 1

In case of inflation under FIFO, the profit on goods sold will be no profit no loss.

Methods of First In First Out:

• The FIFO method is easily understood and also it is very easy to operate this method
• When the prices of the objects fall then this method is very useful
• The objects are issued based on their purchase price and with the help of this method the cost price of the objects are recovered
• In this method, it is very difficult to store an object separately because all the objects are of different prices and date
• When the object is issued on old price then the production cost is not equal to the market price