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what is LIFO method & procedure ? How you can calculate it ?
What is Fund flow ? & what is Cashflow method ? whais is
the use fund flow & cash flow in company?
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Answer Posted / h.r. sreepada bhagi
LIFO(Last in First Out)-This is a method of valuation of
stock (Inventory), where in the latest price of goods
purchased is applied for valuing the inventory at any time.
This is applied only for valuation & not for use of
materials/goods for sale or consumption, as it is always on
FIFO, i.e. stock first received will be sold or consumed
first. There are other method of stock valuations as well -
FIFO9First in First Out), Average Price & Weighted Average
Price.
Funds Flow refers to movement of funds (Working Capital)
during a an accounting period (Month, Quarter, Half year or
year). This statement is prepared to know who the working is
utilised during the period and what is the position of funds
as at the close of that accounting period.
Cash Flow refers to movement of money (Receipts & payments)
during the specified accounting period. Cash-Flow Statement
helps in knowing opening position, receipts from various
sources, payments for various purposes and closing position
of cash & bank balance.
Both Cash-Flow & Funds-Flow help in formulation company's
future course of action & ensure no cash-crunch situation as
also optimum utilisation of available financial resources.
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