Which method of inventory would be least likely to be used by a European firm?
A)FIFO.
B)LIFO.
C)Average cost.
D)LIFO and FIFO.

Question

Quizplus · Accepted Answer

LIFO (last-in-first-out) inventory method assumes that the most recent inventory items are the first ones to be sold. This method results in lower profits as it matches recent, higher-priced inventory with sales, resulting in higher cost of goods sold and lower taxable income.

LIFO inventory method is rarely used in Europe as it is banned by the International Financial Reporting Standards (IFRS) which most European countries follow. Therefore, it is least likely to be used by a European firm.

FIFO (first-in-first-out), average cost, and LIFO and FIFO methods may be used by European firms depending on their preference and industry standards.

Which Method of Inventory Would Be Least Likely to Be