The use of LIFO under a perpetual inventory system (units and costs)
A) may yield a higher inventory valuation than LIFO under a periodic inventory system when prices are steadily falling.
B) may yield a higher inventory valuation than LIFO under a periodic inventory system when prices are steadily rising.
C) always yields the same inventory valuation as LIFO under a periodic inventory system.
D) can never yield the same inventory valuation as LIFO under a periodic inventory system.

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, each transaction is recorded immediately, including the cost of goods sold and inventory. When prices are rising, LIFO (Last-In, First-Out) under a perpetual system may result in a higher inventory valuation compared to a periodic system because the most recent, higher-cost items are left in inventory under perpetual LIFO, whereas in a periodic system, the inventory valuation might include older, lower-cost items if purchases and sales are only tallied at the end of the period.

The Use of LIFO Under a Perpetual Inventory System (Units