Question: During 2015, Crop- Paper- Scissors, a craft store, changed to the LIFO inventory costing method of accounting for inventory. Suppose that during 2016, Crop-Paper-Scissors switches

During 2015, Crop- Paper- Scissors, a craft store, changed to the LIFO inventory costing method of accounting for inventory. Suppose that during 2016, Crop-Paper-Scissors switches back to the FIFO inventory costing method and the following year switches back to LIFO again.

Requirements

1. What would you think of a company’s ethics if it changed accounting methods every year?

2. What accounting principle would changing methods every year violate?

3. Who can be harmed when a company changes its accounting methods too often? How?

Step by Step Solution

★★★★★

3.48 Rating (174 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Requirement 1 Changing accounting methods yeartoyear may compromise a companys credibility which can ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

389-B-A-M-B (2066).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

A company changed its method of accounting for inventory and determined that it was impractical to determine the cumulative effect for all prior periods. The company decided to use the new method on...

You believe that stocks are overvalued so you elect to add bonds to your retirement plan to reduce future potential downside price risk. With cash you've received from the sale of equities, you...

If an entity uses the percentage-of-credit-sales method of accounting for uncollectible accounts, what are the effects on the financial statements if the entity consistently uses too low a percentage...

Instructions: Please do a 200-300 word minimum posting. If you use external sources, like your text or internet sources, please name the source including any URL of any websites. Please see the...

During 2015, Crop-Paper-Scissors, a craft store, changed to the LIFO inventory costing method of accounting for inventory. Suppose that during 2016, Crop-Paper-Scissors switches back to the FIFO...

During 2015, Crop-Paper-Scissors, a craft store, changed to the LIFO inventory costing method of accounting for inventory. Suppose that during 2016, Crop-Paper- Scissors switches back to FIFO...

During 2021, Amandas Creations, a craft store, changed to the LIFO inventory costing method of accounting for inventory. Suppose that during 2022, Amandas Creations switches back to the FIFO...

During 2012, Crop-Paper-Scissors, a craft store, changed to the LIFO method of accounting for inventory. Suppose that during 2013, Crop-Paper-Scissors switches back to the FIFO method and the...

Develop an M-file function for the Newton-Raphson method based on Figure and Sec.6.2.3. Along with the initial guess, pass the function and its derivative as arguments. Test it by duplicating the...

Find the Fourier integral representation of f(x) = { 1 ; |x| 1 and using this S.T integral(infinity,0) sin t/t 2t = pi/2.

14. Ultrasound is the name given to waves that have a frequency greater than the audible range of frequencies. (a) State one possible frequency of an ultrasound wave. (b) Explain how the wavelength...

What words or phrases do you frequently use in your business?

As the manager of Margarita Mexican Restaurant, you must deal with a variety of business transactions. Provide an explanation for the following transactions: a. Debit Equipment and credit Cash. b....

In December 2016, the first five transactions of Atkins Lawn Care Company have been posted to the T-accounts. Prepare the journal entries that served as the sources for the five transactions. Include...

The Sharpe Co. just paid a dividend of $1.40 per share of stock. Its target payout ratio is 40 percent. The company expects to have an earnings per share of $4.95 one year from now. a. If the...

Question 29 1 pts What is the payback period of a project that has an initial cash outflow of $5,000, at time 0, and the following cash inflows? The required return is 10.0%. Year Cash Inflows 1...

What is the value today of a money machine that will pay $2,353.00 per year for 18.00 years? Assume the first payment is made 10.00 years from today and the interest rate is 5.00% Answer format:...