Session 9: Financial Reporting and Analysis: Inventories, Long-lived Assets, Income Taxes, and Non-current Liabilities
Reading 36: Inventories
LOS b: Describe different inventory valuation methods (cost formulas).
In an environment of increasing prices, the last-in first-out (LIFO) inventory cost method results in:
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A) |
cost of sales near current cost and inventory below replacement cost. | |
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B) |
inventory near replacement cost and cost of sales below current cost. | |
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C) |
cost of sales below current cost and inventory above replacement cost. | |
LIFO assumes the most recently purchased items are the first items sold. In an increasing or decreasing price environment, LIFO results in cost of sales that are nearer to current costs compared to other inventory cost methods, and inventory values based on outdated prices (below replacement cost if prices are increasing, above replacement cost if prices are decreasing). | 
发表于 2011-3-21 14:56
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