Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 6 - Reporting and Analyzing Inventory - Questions: 23

Answer

LIFO reserve is the difference between inventory reported using LIFO and inventory using FIFO.

Work Step by Step

Ignoring a large LIFO reserve will clearly distort any comparison analysts may try to make with competitors or previous year figures.
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