Question:

I am confused on this accounting question?

by Guest55593  |  earlier

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. During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory. (Points: 7)

average method

LIFO method

FIFO method

can not tell without more informatio

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2 ANSWERS


  1. FIFO because the the last items purchased would have a lower cost than the first purchased.


  2. Mark is correct.

    LIFO came into prominence during the high inflation years on the US.  the idea was to reduce what people felt were artificially high earnings due to selling of inventory that had been purchased at lower prices.  Here's a link that explains it:

    http://www.investopedia.com/articles/02/...

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