In comparing and contrasting FIFO vs. LIFO inventory procedures, the following listing was developed. You are to complete the tabulation with an answer of "YES" or "NO" as demonstrated by the first item. Any combination of yes-no answers is possible in each situation.

	FIFO	LIFO
Ex: Usually matches the actual physical flow of goods.	Yes	No
Emphasizes the income statement in that it matches the more recent costs with revenue.
Defers tax payments in times of rising prices.
Possibility of liquidating the base may be a significant negative aspect.
Will probably not be adopted if prices are expected to decline.
Emphasizes the balance sheet in that the more recent costs are contained in the inventory account.
Can use price indexes to cost layers.
Switching to this method could cause problems in the equity markets, with loan covenants, etc.
Income figure more accurately reflects cash available for dividends, investments, etc.
Tends to smooth income in periods of fluctuating prices.
Income figure is more "real" in that it doesn't contain "paper profits."
A change to this method must be justified (i.e., to the auditor) other than solely on the basis of the tax effect.
Perpetual inventory results may be different from periodic inventory results.
Is acceptable to the IRS (i.e., for income tax purposes).
Gives lower profits when prices rise.
In a period of rising prices has an adverse effect on assets, working capital, and stockholders' equity.
Quick inventory turnover may have somewhat of a mitigating effect on some of the method's claimed disadvantages.
Improves cash flow in periods of rising prices.
If used for tax purposes, it must be used for financial reporting purposes.
Somewhat opens door for profit manipulation and may cause poor purchase decisions.
Is a current value, rather than a historical cost, valuation method.