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- Title
Inventory Methods, Inflation, and Phantom Profits: Liquidity Issues and Pedagogical Opportunities.
- Authors
Heinfeldt, Jeff; Wolf, Fran M.
- Abstract
This paper discusses the impact of inflation on the inventory cost flow assumption made by corporations. Specifically, it examines potential liquidity problems associated with using FIFo for those firms that are susceptible to inflationary pressures. Pedagogical examples are provided for use in introductory accounting or finance courses as well as courses requiring more in-depth analysis. Its relevance is magnified by the IFRS requirement which prohibits the use of LIFO.
- Subjects
LIQUIDITY (Economics); PRICE inflation; INVENTORY costs; INVENTORIES; FIRST in, first out (Queuing theory); FINANCE education
- Publication
Journal of Financial Education, 2019, Vol 45, Issue 2, p52
- ISSN
0093-3961
- Publication type
Article