Another Problem Is That the Costs of Maintaining a Specific

question 219

Essay

Another problem is that the costs of maintaining a specific identification system may outweigh the benefits of using such a method. As mentioned in part a, financial statement and tax effects of using FIFO and LIFO are more beneficial to companies than simply being able to match the actual cost of a unit to its selling price.
-Your office is on the 68^th floor of your building. The CEO's office is on the 77^th floor. The two of you are waiting for an elevator one morning. The CEO states "Our prices are rising and I want the lowest net income for tax purposes and the highest ending inventory for external reporting purposes. Which inventory method should we use?
Requirement
You have three minutes to respond to the CEO. What is your response?

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Definitions:

Perception

The process by which individuals interpret and organize sensory information to give meaning to their environment.

Psychological Process

The mental mechanisms and operations that underlie an individual's cognitive functions and behavior.

Reactive Devaluation

The tendency to view a proposal or offer as less desirable simply because it originated from an adversary or opposing party.

Concession

An adjustment or compromise made by one party in a negotiation, often to meet the other party halfway.