Inventory

FIFO

100

What does FIFO stand for?

First-In First-Out

200

What financial statement does FIFO focus on?

Balance Sheet

300

Which accounting standard setting body primarily uses FIFO?

IFRS

400

During times of inflation, does cost of goods sold increase or decrease?

Decrease

LIFO

100

Does the LIFO inventory method create a more accurate Balance Sheet or Income Statement?

Income Statement

200

What law made LIFO legal for all taxpayers in the U.S.?

Revenue Act of 1939

300

How does LIFO affect the period’s COGS?

COGS is higher under LIFO

400

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

Conceptual Framework

100

Which standard setting body emphasizes the income statement for making decisions?

U.S. GAAP

200

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

Principle of Conservatism

300

Where in the codification does GAAP discuss inventory?

ASC 330-10

400

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