Under USGAAP,application of the LIFO and FIFO Inventory Methods Result in in Differences

question 48

Essay

Under U.S.GAAP,application of the LIFO and FIFO inventory methods result in differences in the balance sheet,income statement and cash flow statement.Compare and contrast the effect of the two methods on each financial statement and determine the advantages and disadvantages of each method.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Assets

Resources owned by a person or company that have economic value or can provide future benefits, such as cash, property, or investments.

Equipment

Tools, machinery, or other necessary items for a particular purpose or activity.

Stockholders' Equity

The ownership interest of shareholders in a corporation, represented by the company's assets minus its liabilities.