Inventory

Question 1

FIFO vs LIFO (rising prices): COGS

Answer 1

FIFO lower; LIFO higher

Question 2

FIFO vs LIFO: net income

Answer 2

FIFO higher; LIFO lower

Question 3

FIFO vs LIFO: taxes

Answer 3

FIFO higher; LIFO lower

Question 4

What is LIFO reserve?

Answer 4

FIFO − LIFO inventory, representing the cumulative impact of using LIFO instead of FIFO

Question 5

LIFO liquidation effect

Answer 5

Artificially boosts profit

Question 6

Inventory turnover formula

Answer 6

COGS / avg inventory

Question 7

Days inventory formula

Answer 7

365 / turnover

Question 8

Inventory write-down effect

Answer 8

Lowers inventory and profit

Question 9

IFRS vs US GAAP: reversal

Answer 9

Allowed under IFRS, not US GAAP