GAAP states that if it is impractical to determine the cumulative effect of applying a change in accounting principle to prior periods-such as when a firm adopts the LIFO inventory accounting method-the new accounting principle is to be applied as if the change was made prospectively as of the earliest date practicable.

Gaap

Generally Accepted Accounting Principles are the standard framework of guidelines for financial accounting used in any given jurisdiction, commonly the U.S.

Lifo Inventory

A method of inventory valuation where the last items placed into inventory are the first ones taken out, used to calculate the cost of goods sold and ending inventory.