Oliver & Co.has been in business for fifteen years.During that time,the company has consistently used the LIFO inventory costing method.Because of inflation,purchase prices for merchandise have increased consistently over the fifteen years.The company has maintained the same inventory quantities over the fifteen years.Which of the following statements is true for the company?

Question

Quizplus · Accepted Answer

Since the company has consistently used the LIFO method and purchase prices have increased over time, the value of the ending inventory reported on the balance sheet may be significantly lower than its current value. This is because the most recent (and likely most expensive) inventory items are used to calculate the cost of goods sold, leaving the older, less expensive items in inventory. This can result in an understatement of the value of the ending inventory. The other options are not necessarily true or relevant based on the information given.