Valuation comparison
| Method | Cost of sales | Closing units | Closing stock value | Gross profit |
|---|
The highlighted row has the lowest cost of sales, and so the highest gross profit, when selling prices are entered.
The inventory method you choose changes your cost of sales, closing stock and profit. This free inventory valuation calculator compares FIFO, LIFO and weighted average cost (AVCO) side by side from the same purchases and sales. Switch between perpetual and periodic costing, and open a full stock ledger for each method. It is built for ACCA, CA and accounting students, and for small businesses reviewing their stock costs.
How to Use:
- Choose perpetual or periodic costing.
- Add your opening stock and each purchase with its units and cost per unit.
- Add each sale with its units and, optionally, the selling price per unit.
- Click Calculate to compare cost of sales, closing stock and gross profit for all three methods.
- Open the stock ledger under each method to see every step.
FAQs:
Q: What is the difference between FIFO, LIFO and AVCO?
A: FIFO assumes the oldest stock is sold first, LIFO assumes the newest is sold first, and AVCO uses the average cost of all units.
Q: What is the difference between perpetual and periodic?
A: Perpetual updates stock after every transaction. Periodic prices closing stock once at the end of the period.
Q: Which method gives the highest profit?
A: When prices are rising, FIFO usually gives the highest profit and LIFO the lowest.
Q: Is LIFO allowed under IFRS?
A: No. IFRS does not permit LIFO, so use FIFO or AVCO for IFRS exams and reports.
