A disadvantage of the LIFO method of inventory valuation is:
A) it gives a poor matching of current costs with current revenues
B) its use accentuates the business cycle
C) closing inventory on the balance sheet may be undervalued
D) all of the above are disadvantages

Question

Quizplus · Accepted Answer

LIFO can result in the closing inventory on the balance sheet being undervalued because it uses the most recent costs to calculate the cost of goods sold, leaving older, potentially lower costs in inventory.

A Disadvantage of the LIFO Method of Inventory Valuation Is