An unrealistic picture of the inventory's current value on the balance sheet is an argument against using
A)Specific identification.
B)FIFO.
C)Average-cost.
D)LIFO.

Question

Quizplus · Accepted Answer

LIFO can result in a more accurate reflection of the current value of inventory on the balance sheet, as it assumes that the most recently acquired inventory is sold first, leading to a closer correlation between the reported inventory value and its current market value. Specific identification would also provide an accurate reflection but is often impractical. FIFO and average-cost can result in an unrealistic picture of the inventory's current value, particularly during periods of inflation or rapidly changing prices.

An Unrealistic Picture of the Inventory's Current Value on the Balance