# Temporal LIFO/FIFO

I keep thinking I have the whole LIFP/FIFO temporal things figued out and then… Under the temporal method, the inventory and cost of goods sold (COGS) accounts are both nonmonetary accounts. Which of the following statements is least accurate regarding these accounts? A) The Inventory account is remeasured using the historical rate under both LIFO and FIFO. B) If the firm accounts for inventory using first in, first out (FIFO), then a more current rate will be applied to the inventory account. C) If the firm accounts for inventory using last in, first out (LIFO), then the beginning-of-period rate is used to remeasure COGS. It seems to me that A and B contradict each other?

Question asks least accurate. so the Answer is (A). They do contradict but it is possible and if it happens finding answer choice becomes even easier.

I also thought A but… Your answer: A was incorrect. The correct answer was C) If the firm accounts for inventory using last in, first out (LIFO), then the beginning-of-period rate is used to remeasure COGS. Under LIFO, the last goods purchased are the first goods out to COGS. Hence, although technically the historical rate is used to remeasure COGS, a more recent rate is typically more appropriate for COGS under LIFO.

Under the temporal method, the inventory and cost of goods sold (COGS) accounts are both nonmonetary accounts. Which of the following statements is least accurate regarding these accounts? A) The Inventory account is remeasured using the historical rate under both LIFO and FIFO. B) If the firm accounts for inventory using first in, first out (FIFO), then a more current rate will be applied to the inventory account. C) If the firm accounts for inventory using last in, first out (LIFO), then the beginning-of-period rate is used to remeasure COGS. Look at the solution in this way: A) is correct. Under Temporal Method - both Inventory and COGS are measured at the Historical Rate. Between B and C --> this is a scenario where the Average Cost scenario DOES NOT APPLY. B) If the firm accounts for inventory using first in, first out (FIFO), then a more current rate will be applied to the inventory account. when FIFO is applied - Ending Inventory is all current inventory - because Historical Inventory is going into COGS - what came in first, is used first. So COGS would be Historical, Ending Inventory would be most RECENT. So B is correct. C) If the firm accounts for inventory using last in, first out (LIFO), then the beginning-of-period rate is used to remeasure COGS. When LIFO is applied - Current Inventory goes into COGS - so Historical Rate in this case for COGS would mean the Current Rate, And Ending Inventory would be the actual Historical Rate of Procurement of the items. So C) is Incorrect.

Stupid mistake to start the day Agree that it is C