Which of the following statements concerning a firm using FIFO is false? a) There is no reason to convert inventory to LIFO because LIFO inventory is less reflective of current value b) It is impossible to estimate COGS on a LIFO basis c) If prices are rising and inventory levels are stable, the firm will have higher inventory than a firm using LIFO d) If prices have been rising and the firm is located in US, taxes would be lower under LIFO than under FIFO
b
a) There is no reason to convert inventory to LIFO because LIFO inventory is less reflective of current value You want to convert to LIFO to get COGS based on LIFO which is more applicable for some ratios such as gross profit margin.
B tsttse… you have the right idea, but option A states “no reason to convert INVENTORY to LIFO”
You are right, I was wrong. Answer is definately B.