For a firm using LIFO,the numerator of the inventory turnover ratio is predominantly current period costs
A)and the denominator consists of old LIFO costs.
B)thus it must be adjusted to conform to the old LIFO costs in the denominator.
C)thus the denominator must be adjusted by adding the LIFO reserve to ending inventory.
D)thus the denominator must be adjusted by subtracting the LIFO reserve from both beginning and ending inventory.

Question

Quizplus · Accepted Answer

The inventory turnover ratio under LIFO uses current period costs in the numerator (cost of goods sold) and the denominator consists of old LIFO costs (ending inventory), reflecting the last-in, first-out method where the most recently incurred costs are charged to cost of goods sold, while the ending inventory reflects older costs.

For a Firm Using LIFO,the Numerator of the Inventory Turnover