companies that report inventory using the lifo method must report the difference between the lifo cost and fifo cost of its inve

Question

Vinvika [58]

1 year ago

4

companies that report inventory using the lifo method must report the difference between the lifo cost and fifo cost of its inve

ntory. this difference is commonly called the lifo reserve.

Business

1 answer:

Aleks04 [339] · Answer 1 · 2024-07-01T05:52:38+03:00

It is a true statement that companies that report inventory using the lifo method must report the difference between the lifo cost and fifo cost of its inventory; and this difference is commonly called the lifo reserve.

<h3>What is a LIFO reserve?</h3>

In cost accounting, a LIFO reserve refers to the accounting term that measures the difference between the first in, first out (FIFO) and last in, first out (LIFO) cost of inventory for bookkeeping purposes.

The main benefits of the LIFO reserve is that it allows the investors and analysts to compare companies that use different accounting methods equally. However, it also allows a comparison between LIFO and FIFO and the ability to understand any differences including how taxes might be impacted.

Full sentence "companies that report inventory using the lifo method must report the difference between the lifo cost and fifo cost of its inventory. this difference is commonly called the lifo reserve. True/False"