FIFO
What does FIFO stand for?
First-In First-Out
Does the LIFO inventory method create a more accurate Balance Sheet or Income Statement?
Income Statement
Which standard setting body emphasizes the income statement for making decisions?
U.S. GAAP
What financial statement does FIFO focus on?
Balance Sheet
What law made LIFO legal for all taxpayers in the U.S.?
Revenue Act of 1939
IFRS allowance of inventory reversals in regards to lower of cost and net realizable value potentially violates this GAAP principle
A. The matching principle
B. The principle of conservatism
C. Accrual Basis Accounting
D. Revenue Recognition
Which accounting standard setting body primarily uses FIFO?
IFRS
How does LIFO affect the period’s COGS?
COGS is higher under LIFO
Where in the codification does GAAP discuss inventory?
ASC 330-10
During times of inflation, does cost of goods sold increase or decrease?
Decrease
What inventory accounting method led to the use of LIFO in the U.S. but was banned in the early 1900’s?
Base Stock Method
What are the two differences in inventory accounting between GAAP and IFRS that created a road block to the U.S. adoption of IFRS?
1. LIFO
2. IFRS allowance of reversals of the lower of cost or NRV