Inventory valuation methods are based on the systematic cash flow of adding and removing inventory costs. Each method has its advantages and disadvantages. When selecting an inventory method, management should select the method that best reflects operational needs. Last in, first out (LIFO) and first in, first out (FIFO) are two of the inventory methods that we have discussed. Assume that you are investing in a publicly traded company during a period of rising prices. Would you prefer that the company use LIFO or FIFO for inventory valuation? Please support your response.

Q: Which Inventory Valuation method gives the highest profit when inventory costs are rising? a.…

A: The inventory can be valued using various methods as FIFO, LIFO and average method. Using FIFO, the…

Q: Generally accepted accounting principles require that the inventory of a company be reported at:…

A: The inventory can be reported at various values as historical cost, market value, net realisable…

Q: Which of the following statements is correct? Group of answer choices A)The choice of an inventory…

A: SOLUTION AVERAGE COST METHOD IS USED TO CALCULATE THE COST OF INVENTORY AT THE END AND ALSO THE COST…

Q: Compare the financial effects (ignore income tax) of using period of declining prices on the…

A: Depreciation is the process of reducing the value of the assets. It is a non-cash expense of the…

Q: a) Compare the periodic versus the perpetual system as a control device. b) What sort of…

A: The periodic and perpetual inventory Systems are two systems used to track the quantity of goods…

Q: Which of the following is false regarding the LIFO method of inventory valuation? a. The material…

A: Last-In-First-Out method(LIFO) is one of the method of inventory valuation where units sold are…

Q: Inventory value should be adjusted downward when: a company switches from periodic to a perpetual…

A: The inventory value should be adjusted downward when the utility or value of the inventory is less…

Q: If the ending inventory of a firm is overstated by $49,000, by how much and in what direction…

A: Computation of Income: Gross Profit = Sales – COGS COGS = Opening Inventory + Purchases – Closing…

Q: Identify the inventory costing method (SI, FIFO, LIFO, or WA) best described by each of the…

A: Each inventory valuation methods possesses its own uniqueness that will affect the financial…

Q: During a period of rising inventory prices, a company's cost of goods sold would be higher using the…

A: LIFO means last in first out where as FIFO means first in first out.Inventory and cost of goods sold…

Q: Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared tothe cost of replacing…

A: If a company follows FIFO method, then the inventory will go based on first in first out. If a…

Q: Assuming rising inventory prices, which statement is correct? Group of answer choices A. FIFO…

A: INTRODUCTION: First in, first out, or FIFO, is a technique of valuing assets or inventories. The…

Q: Which of the following statements is incorrect? Select one: a. By using the IFRS, goods shipped on…

A: Option C is correct.

Q: In general, it's better to have a low inventory turnover ratio than a high one, as a low ratio…

A: The financial ratios refer to the ratios that are calculated using the financial data from the…

Q: During times of deflation , LIFO will provide the highest closing inventory figure and the highest…

A: A drop in the overall price level of products and services is referred to as deflation. When the…

Q: Explain how the inventory valuation method (LIFO or FIFO) chosen by a company affects the cost of…

A: Inventory management refers to the valuation of inventory in three ways FIFO, LIFO and weighted…

Q: Which one of the following statements is true? a. Under conditions of rising prices, the LIFO…

A: Step 1    Last in, first-out (LIFO) is inventory method in which the costs of the most recent…

Q: 3. What is the purpose of the current ratio? Assume that Island Solutions want to compute its…

A: The current ratio is a financial metric that measures a company's ability to cover its short-term…

Q: An analyst wants to compare one firm's level of inventory last year to a competitor firm's level of…

A: Examining a company's financial reports, including its cash flow statement, balance sheet, and…

Q: he management of Milque Corp. is considering the effects of various inventory-costing methods on its…

A: Introduction:- The following four inventory valuation methods used as follows under:- First-In,…

Q: 13.In periods of rising prices, which is an advantage of using the LIFO inventory costing method? a.…

A: LIFO method: LIFO means Last-In-Last-out. Under this method good purchased last are first issued to…

Q: Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)?…

A: Inventory means the stock of goods in which the businessmen deals. Every company wants to maintain…

Q: Question: Which of the following inventory valuation methods typically results in higher ending…

A: Inventory valuation methods are crucial in accounting as they determine how a company values its…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.