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Is LIFO is a fair inventory valuation method? Beneficial?

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- Discuss whether or not you believe that LIFO is a fair inventory valuation method.
- Identify three different businesses and then state whether they would benefit most from the FIFO, LIFO or Weighted Average approach to accounting for their inventories. State a reason with your answer.
- Discuss what procedures a company may take to reduce the chance of fraudulent employee activities.
- If you became aware of fraudulent accounting activities in the company where you are employed, discuss what you would do about it, if anything, and state why or why not.

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Solution Summary

Your tutorial is 514 words and discusses three business, ways fraud can be reduced and how I might handle a fraud discovery. The fairness of LIFO is discussed.

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Discuss whether or not you believe that LIFO is a fair inventory valuation method.

"Fair" is a judgment call. It is "fair" in that it is clear, transparent and a generally acceptable method of measuring cost of goods. It is the best measure of current profits because current costs are in profit computations but it is not a good measure of the value or cost of inventory not sold.

Identify three different businesses and then state whether they would benefit most from the FIFO, LIFO or Weighted Average approach to accounting for their inventories. State a reason with your answer.

Grocery store: FIFO is best because it is closest to the actual flow of goods. That is, the older items sell first with the newer items being either in the storeroom and not brought out until the current items ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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