The term LIFO reserve refers to
A) a cost flow assumption for valuing inventory
B) a special fund set aside to cover LIFO liquidation
C) inventory pools used in the dollar-value LIFO method
D) any difference between the ending inventory amount under LIFO and the ending inventory amount under FIFO or average cost

Question

Quizplus · Accepted Answer

The LIFO reserve is the difference between the cost of inventory calculated under the LIFO method and the cost calculated under another inventory accounting method like FIFO or average cost. This reserve accounts for the impact of inflation on inventory valuation.

The Term LIFO Reserve Refers to