Question

In: Accounting

In making a changes to a method in an accounting practice/method, why do you think it...

In making a changes to a method in an accounting practice/method, why do you think it would be import to compare the reports(FIFO &LIFO) using both to give the reader the results using both methods. IE in your inventory change, what would be COS using both

Solutions

Expert Solution

It is very important to analyze the pricing trend before selecting a method of inventory accounting.

I have prepared an extract to summarize my point. In the extract, you will see with a given purchase price and quantity, the change in the cost of sales (COS) and closing stock value.

FIFO = First in and first out, where inventory which has been purchase first will be taken out first in the case of sales.

LIFO = Last in and last out, in this case, inventory which has been purchased at the latest date would be taken out first.

During a shift in accounting policy of inventory accounting, it is also important to note that the company would have to create a reserve.  


Related Solutions

Why do you think leasing is as popular as it is in practice?
Why do you think leasing is as popular as it is in practice?
Why do you think leasing is as po pular as it is in practice? Why do...
Why do you think leasing is as po pular as it is in practice? Why do you think leasing is as popular as it is in practice?
Why do you think IRR continues to be as popular in practice as it is? Additionally...
Why do you think IRR continues to be as popular in practice as it is? Additionally if you were looking at a sizable investment in a product line -- what additional method(s) would you use to make the decision and why?
Why do you think tax accounting is close to cash basis accounting?
Why do you think tax accounting is close to cash basis accounting?
Do you think it is important to have a standardized entry into practice for nursing? Why...
Do you think it is important to have a standardized entry into practice for nursing? Why or why not? What should the entry level be and why? What do you perceive as the barriers and what do you think should/could be done to accomplish this goal?
Cost accounting is often referred to as "managerial accounting". Why do you think this is so?...
Cost accounting is often referred to as "managerial accounting". Why do you think this is so? Discuss the ways that a company uses cost accounting, and how it uses financial information for the purposes of cost accounting. Discuss the differences between the reports prepared for managerial accounting and those prepared for financial accounting.
1. Decision Making and Management Effectiveness Why do you think decision making is considered a fundamental...
1. Decision Making and Management Effectiveness Why do you think decision making is considered a fundamental part of management effectiveness? 2. How to Compensate for Relative Lack of Experience As a new, entry-level manager, how important is it for you to find ways to compensate for your relative lack of experience when trying to determine which alternative before you is most likely to succeed? What are some ways you can meet this challenge? 3. Using Social-Networking Sites to Help Market...
Why do you think that one of the biggest changes in financial reporting occurred during this...
Why do you think that one of the biggest changes in financial reporting occurred during this past year with the voluntary disclosures of critical audit matters, or CAMS, in accordance with a recent standard from the Public Company Accounting Oversight Board? (In your answer, provide a definition of what are included in CAMS.)
Do you think intuition is respected as a decision making style? Do you think it should...
Do you think intuition is respected as a decision making style? Do you think it should be? Why or why not? 2. Describe a time when you fell into one of the decision making traps. How did you come to realize that you had made a poor decision?
Which do you think changes first, strategy or structure? After formulating your answer and making your...
Which do you think changes first, strategy or structure? After formulating your answer and making your case, argue the opposite position.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT