Can someone help me to solve this question with explaination?It is urgent...
I totally don know what is FIFO and LIFO and how to answer the question like this.

Sunrise Company draws up its financial statements every 31March. The details of its purchases and sales for the financial year are as below:

Details of Purchases:
Date-No. of Units-Cost per units(in $'000)
1999 April 2-300-2
1999 Sept 14-400-3
1999 Oct 10-100-3.5
1999 Dec 18-200-4
2000 Mar 28-400-5

Details of Sales:
Date-No. of Units-Selling price per units(in $'000)
1999 July 3-200-6
1999 Oct 4-300-6.5
1999 Nov 20-100-7.5
2000 Jan 17-300-8.5

The Company uses the preprtual inventory system. On 1 April 1999, the inventory balance was zero.

a)show the above transactions in the inventory record with purchases, cost of goods sold balance columns using FIFO and LIFO methods.
b)calculate the gross profits using FIFO and LIFO methods for the financial year 31 march 2000.

My personal question:
1)the difference on using there two methods is what?
2)If is is periodic system what will be the changes in the answer?Can done the answer by periodic system using above question?

Thanks for anyone for helping me...

CaptainForest

FIFO = First in Fist Out

FIFO assumes that the items you buy first, you will sell first. Example. I buy fridges and then sell them to customers. I buy 10 fridge’s in April and 5 more in May.

In July I sell 12 of them (it is assumed that I sold the 10 of April and 2 of May).



LIFO = Last in First Out

LIFO is the opposite of FIFO.

It will assume that I sold the 5 in May and 7 in April.


Therefore, my ending inventory would be:
FIFO: The cost of 3 fridges in May
LIFO: The cost of 3 fridges in April.

Typically, costs keep going up, so the cost to me of buying a fridge in May will be higher than the cost in April.



Differences:

FIFO
-inventory is higher than it would be in LIFO
- b/c inventory is higher, COGS is lower, and therefore Net Income is higher

LIFO
- inventory is lower than it would be in FIFO
- b/c inventory is lower, COGS is higher, and therefore Net Income is lower