Problem:
Consider the LIFO and FIFO inventory accounting methods. If the business was in a period of increasing costs for its inventory which method would you recommend to management and why? Would your recommendation be different if the company were privately owned or publicly traded? When answering this question do not confuse the accounting under FIFO and LIFO with the actual physical movement of the inventory. This is an accounting convention and not an inventory management technique or program. Think through what impact would result from your decision and whether it is different for public or private companies.