Accounting for IGCSE & O level - Final Statements (Section 3 - No. 11)
How does the choice of inventory valuation method (FIFO, LIFO, AVCO) affect a company's reported profit during periods of changing prices?
It has no impact on reported profit.
It can significantly impact reported profit.
It only affects the cost of inventory.
It only affects the balance sheet, not the income statement.
Forklaring
Different valuation methods result in different COGS and thus impact profits.