Inventory turnover distortion under LIFO inventory costing may be adjusted by

Question

Quizplus · Accepted Answer

C) Adding the LIFO reserve amounts to beginning and ending inventory and adjusting cost of goods sold for LIFO liquidation profits whenever LIFO liquidation occurs helps in adjusting inventory turnover distortion under LIFO. This is because the LIFO reserve represents the difference between the cost of inventory calculated under LIFO and its cost under FIFO. Adjusting the inventory values by adding the LIFO reserve makes the inventory values more comparable to those of companies using other inventory costing methods, thus providing a clearer picture of inventory turnover.

Inventory Turnover Distortion Under LIFO Inventory Costing May Be Adjusted