Chapter 22, Problem 3UJ

To determine

Accounting principles: Accounting principles are the set of guidelines that must be followed by the companies for the preparation of financial statements.

(a)

To prepare: To prepare financial statements of ABC co. for the year ended December 31, 2017.

To determine

(b)

To compute: To compute ABC’s inventory turnover for 2016 and 2017 under both LIFO and FIFO.

To determine

(b)

To determine as to why GAAP requires companies that change accounting methods to recast prior year’s financial statement data.