Question

During 2015, Crop-Paper-Scissors, a craft store, changed to theLIFO inventory costing method of accounting for inventory. Supposethat during 2016, Crop-Paper-Scissors switches back to the FIFOinventory costing method and the following year switches back toLIFO again.

Explain the effect of Lifo inventory valuation on inventory andCOGS.

Explain the effect of FIFO inventory valuation on inventory andCOGS.

What would you think of a company's ethics if it changedaccounting methods every year?

What accounting principle would changing methods every yearviolate?

Who can be harmed when a company changes its accounting methodstoo often? How?

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