If there is inflation how does this affect LIFO reserves? Does it increase or decrease it?
If there is inflation how does this affect LIFO reserves? Does it increase or decrease it?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If there is inflation how does this affect LIFO reserves? Does it increase or decrease it?
Expert Solution
Step 1Basic Information
LIFO Last-in-first out is a method used to issue material. It is a method of pricing the issues of materials on the basis of assumption that the items of the last batch (lot) purchased are the first to be issued. Therefore, under this method the prices of the last batch (lot) are used for pricing the issues, until it is exhausted, and so on.
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