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Basic Question 16 of 24
Which of the following results from using the LIFO method of inventory cost flows during a period of inflation?
B. Overvalued inventory
C. Currently valued cost of goods sold
D. Currently valued inventory
A. Understated cost of goods sold
B. Overvalued inventory
C. Currently valued cost of goods sold
D. Currently valued inventory
User Contributed Comments 3
| User | Comment |
|---|---|
| stranger | a. COGS is overstated since we are valuing COGS at the current higher prices. b. inventory would be undervalued since it is valued at the first in costs. c. COGS ARE CURRENTLY VALUED (CURRENT PRICES) d. inventory is valued at first in costs. |
| chicyvan | nice explaination. Thank you |
| cwest020 | Stranger is incorrect on A. COGS is not overstated, it is valued at current prices. Hence the correct answer of C. |
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Learning Outcome Statements
describe general principles of expense recognition, specific expense recognition applications, implications of expense recognition choices for financial analysis and contrast costs that are capitalized versus those that are expensed in the period in which they are incurred
CFA® 2024 Level I Curriculum, Volume 2, Module 2.