As an accountant for the OPQ Distribution Business, I'd want to recommend the FIFO inventory

valuation process. As a company that sells medical and hospital equipment, I would have few

reservations about proposing such a procedure.

Explain why you believe it is the best fit for the company.

University Of the People

Written Assignment Unit 5

BUS1102 – Basic Accounting

Michael Marslek

10/4/21

I have no reservations about using the FIFO system for a variety of reasons:

1. The primary consideration is the product's expiration date. Any latex glove has a maturity date

and will never be thrown away or wasted due to the FIFO process. Because thermometers and

wheelchairs do not expire, new models that reduce product sales will continue to be

manufactured. The LIFO approach can be used in other situations and organizations.

2. The FIFO approach is clearly more valuable in terms of extension when the LIFO is still not

globally known. The FIFO method is widely regarded as the most effective.

3. FIFO only serves the normal product flow, ensuring that bookkeeping is less likely to be

misunderstood. FIFO vs LIFO (n.d., 2020)

Explain the cost of goods sold, ending inventory, and how the inventory valuation method you

have chosen may impact these two factors. The preferred method of inventory valuation has a

significant impact on the prices for items sold (COGS). For real estate, the oldest units with the

lowest valuation are sold first using the FIFO method, resulting in lower COGS and a greater

benefit. In these cases, higher tax rates are levied, which is one of the drawbacks of using the

LIFO system, which is unquestionably more useful in this regard. As a result, the valuation of

the goods considered for is much higher than the old ones, as the new items are more expensive

than their predecessors. Any company can avoid the challenge of purchasing and supplying such

a large stock cap at the end of the year, which is typically the time frame in which inventory is

taken from.

References:

Franklin, M. Graybeal, P. & Cooper, D. (2020). Principles of accounting, volume 1: Financial

accounting. Open Stax Rice University. Retrieved from

https://openstax.org/details/books/principles-financial-accountingn.d. (2020) FIFO vs LIFO |

Definitions, Differences and Examples. Retrieved from

https://www.freshbooks.com/hub/accounting/fifo-vs-lifo

Word Count: 361