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10. In all cases when FIFO is used, the cost of goods sold would
be the same whether a perpetual or periodic system is used.
11. The change in the LIFO Reserve from one period to the next is
recorded as an adjustment to Cost of Goods Sold.
12. Many companies use LIFO for both tax and internal reporting
purposes.
13. LIFO liquidation often distorts net income, but usually leads
to substantial tax savings.
14. LIFO liquidations can occur frequently when using a specific-
goods approach.
15. Dollar-value LIFO techniques help protect LIFO layers from
erosion.
16. The dollar-value LIFO method measures any increases and
decreases in a pool in terms of total dollar value and physical
quantity of the goods.
17. A disadvantage of LIFO is that it does not match more recent
costs against current revenues as well as FIFO.
18. The LIFO conformity rule requires that if a company uses
LIFO for tax purposes, it must also use LIFO for financial accounting
purposes.