Using the LIFO method of inventory valuation will always produce the same results whether a company uses perpetual or periodic inventory costing methods.

Question

Quizplus · Accepted Answer

This statement is false. The LIFO method of inventory valuation can produce different results depending on whether a company uses perpetual or periodic inventory costing methods. Under the periodic method, the cost of goods sold is calculated at the end of the accounting period based on the total units sold and the ending inventory balance, which may not reflect the actual order in which the goods were sold. In contrast, under the perpetual method, the cost of goods sold is updated in real-time with every sale, which provides a more accurate reflection of the order in which the goods were sold. As a result, the LIFO method may result in different inventory values and cost of goods sold amounts under the two methods.

Using the LIFO Method of Inventory Valuation Will Always Produce