Bank Reconciliation Statement

Definition of 'Bank Reconciliation Statement'

A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.

Since there are timing differences between when data is entered in the banks systems and when data is entered in the individual's system, there is sometimes a normal discrepancy between account balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing.

IAS 2 Inventries

Why does LIFO usually produce a lower gross profit than FIFO?

LIFO usually produces a lower gross profit than FIFO only because the costs of the goods purchased or produced have been increasing over the past decades. Since LIFO assigns the latest costs of the goods purchased or produced to the cost of goods sold, the rising costs mean a higher amount of cost of goods sold on the income statement. That in turn means a lower gross profit than assigning the first or oldest costs to the cost of goods sold under FIFO.
If costs were to steadily decrease over several years, LIFO would result in a higher gross profit than FIFO. The reason is that LIFO would be assigning the latest costs (which will be lower costs than the first or oldest costs) to the cost of goods sold on the income statement. That in turn means a higher gross profit than under the FIFO cost flow assumption