LIFO Ethical Dilemma

LIFO Ethical Dilemma

R. J. Graziano Wholesale that uses LIFO (last-in first-out) inventory method is to make a huge inventory purchase three days to the end of the financial year. By making the purchase, the company is taking advantage of the economic climate to improve its overall profitability in that it reduces its income tax payment. This is because the cost of the items it deals in has doubled over the year and hence it 
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The huge inventory could however have a negative effect on the company’s income statement...

However, the accountant should order the inventory purchase albeit that it raises various ethical dilemmas.

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References

US Securities and Exchange Commission. (undated). LIFO Inventory Practices. https://www.sec.gov/interps/account/sabcodet5.htm#L. Accessed July 26, 2016.

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