Question

When a company uses LIFO for external reporting purposes and FIFO for internal reporting purposes, an Allowance to Reduce Inventory to LIFO account is used. This account should be reported: on the income statement in the Other Expenses and Losses section. on the balance sheet in the Current Assets section. on the income statement in the Cost of Goods Sold section. on the income statement in the Other Revenues and Gains section.

Answer 1

Answer:

This account should be reported on the balance sheet in the Current Assets section.

Explanation:

Current assets are situated at the start of the balance sheet assets section. This portion of the balance sheet includes some short-term assets that are easiest to turn into cash.

Depending on its comparative ability to generate into money (called the liquidity order), every one of the current asset line items is placed on the balance sheet.