The conversion of a LIFO inventory to approximate the inventory at FIFO is accomplished through application of which one of the following formulas?
A)FIFO inventory = LIFO inventory × LIFO reserve
B)FIFO inventory = LIFO inventory ÷ LIFO reserve
C)FIFO inventory = LIFO inventory - LIFO reserve
D)FIFO inventory = LIFO inventory + LIFO reserve

Question

Quizplus · Accepted Answer

The correct formula to convert LIFO inventory to approximate FIFO inventory is to add the LIFO reserve to the LIFO inventory. The LIFO reserve is the difference between the inventory reported under LIFO and what the inventory would have been under FIFO. Therefore, adding the LIFO reserve to the LIFO inventory gives an approximation of the FIFO inventory.

The Conversion of a LIFO Inventory to Approximate the Inventory