During 2012, Crop-Paper-Scissors, a craft store, changed to the LIFO method of accounting for inventory. Suppose that during 2013, Crop-Paper-Scissors switches back to the FIFO method and the following year switches back to LIFO again.
Requirements
1. What would you think of a company’s ethics if it changed accounting methods every year?
2. What accounting principle would changing methods every year violate?
3. Who can be harmed when a company changes its accounting methods too often? How?