One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers.
Required:
a. Explain what is meant by invent ory liquidation under the LIFO cost flow assumption.
b. Discuss why this may be a serious problem for LIFO but not for FIFO.

Question

One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers.
Required:
 a. Explain what is meant by invent ory liquidation under the LIFO cost flow assumption.
b. Discuss why this may be a serious problem for LIFO but not for FIFO.

Quizplus · Accepted Answer

The Answer of One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers.
Required:
 a. Explain what is meant by invent ory liquidation under the LIFO cost flow assumption.
b. Discuss why this may be a serious problem for LIFO but not for FIFO.

One of the Disadvantages of the LIFO Cost Flow Assumption