FIFO vs LIFO

Inventory accounting and management are key functions in manufacturing and trading companies. Inventory consists of everything from raw material, production consumables to work in progress and finished goods. Large manufacturing and trading companies have considerable amounts invested in their inventories and thus its accounting and management assumes an even more important role. Inventory accounting involves … Read moreFIFO vs LIFO

Depreciation vs amortization

Fixed assets are resources that generate economic benefit for a business over a long duration, often across several accounting periods. Fixed assets are thus initially capitalized and subsequently a part of its cost is expensed out in each accounting period. This is also in line with the ‘matching concept’ in accounts which provides that expenses … Read moreDepreciation vs amortization

Difference between operating and non-operating expenses

Operating Expenses: Those expenses which a business incurs to run its day-to-day business operations but are not related to the production process directly are known as operating expenses. These expenses can be categorized as selling, admin, marketing, advertising expenses etc. Non-operating Expenses: Such expenses that are neither related to normal course of activities of a … Read moreDifference between operating and non-operating expenses

Difference between FIFO and weighted average method of inventory valuation

FIFO and weighted average are referred as two methods used for valuation of inventory in a company. Inventory valuation is important because it affects many other vital figures especially those written in the financial statements of a business e.g. cost of goods sold, gross profit, the value of closing inventory mentioned in total assets etc. … Read moreDifference between FIFO and weighted average method of inventory valuation