Asked by Jawwad Siddiqui on May 16, 2024
Verified
A disadvantage of the LIFO method is that:
A) it doesn't match physical flow of goods.
B) ending inventory is valued at very old costs.
C) it matches current selling prices and current costs.
D) Both A and B are correct.
LIFO Method
An inventory costing method where the last items of inventory purchased are the first ones sold, used to calculate cost of goods sold and ending inventory.
- Evaluate the pros and cons of different methods for valuing inventory.
- Acknowledge the distinction and utility of FIFO, LIFO, weighted-average, and specific invoice strategies in inventory valuation.
Verified Answer
AA
Abyan Artyasana PradanaMay 18, 2024
Final Answer :
D
Explanation :
The LIFO (Last-In, First-Out) method has several disadvantages, two of which are that it often doesn't match the physical flow of goods (A) and results in ending inventory being valued at very old costs (B), making both A and B correct.
Learning Objectives
- Evaluate the pros and cons of different methods for valuing inventory.
- Acknowledge the distinction and utility of FIFO, LIFO, weighted-average, and specific invoice strategies in inventory valuation.