If both inventory prices and inventory quantities for a company are increasing, which of the following inventory accounting methods results: most informative income statement…inventories closest to eco value LIFO…FIFO LIFO…weighted average Weighted Average…FIFO Weighted average…Weighted average why does LIFO give a more informative income statement in this case?
COGs reflects current cost of inventory. In a FIFO BS --> EI reflects current cost of inventory.
'coz your COGS better reflects the current prices of inventory.
Just want to point out that LIFO is always a better choice for the income statement (even if prices are falling) and FIFO is a better choice for the Balance Sheet. The rest of the stuff are just distractors
yup…pretty much whichever one reflects current prices is the better one