FIFO Accounting Technique (1 Viewer)

[magicgate3]

Hey,

Can we argue that FIFO is a profitability management strategy, in direct to expense minimisation. As, costs/expenses are understated in order to overstate profits or can the marker refute it's unethical behaviour by the business to do so if uses that accounting method.

Thanks

 

[vermillion]

i wouldn’t call it expense minimisation/cost leadership because it’s more to do with inventory management, and financial statements in a way because it simply changes the way stakeholders see business performance. it won’t decrease expenses literally because its just manipulation of numbers to make it look like a business is doing better.