Which one of the following statements regarding changing inventory methods is true?
A) A change in inventory methods can be justified if the change is made to better match profits with revenue.
B) One place that the reader of an annual report would be able to identify that a company changed inventory methods is the statement of stockholders' equity.
C) Changing inventory methods affects consistency.
D) Tax advantages are valid justification for changing inventory methods.

Question

Quizplus · Accepted Answer

Changing inventory methods affects the consistency of financial reporting over time, making it harder to compare financial statements across periods. Consistency is a key accounting principle, and changes in inventory methods disrupt this consistency, which is why such changes are generally disclosed in the financial statements.

Which One of the Following Statements Regarding Changing Inventory Methods