Q: Are there any advantages in using the FIFO system over the LIFO system in terms of VAT?
28 August 2012
There is no advantage whatsoever as vat is accounted for at the point of purchase and, as a result, stock is dealt with net of VAT.
There is no advantage whatsoever as vat is accounted for at the point of purchase and, as a result, stock is dealt with net of VAT.
A further point to be considered, however, is that the LIFO method is not allowable for tax purposes in the UK because it artificially depresses the profit figure. This does not mean that it cannot be used for accounting purposes,...