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Discuss the concept of conservatism

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Question - General Motors and Ford use LIFO method to value their inventories. Honda and Daimler Benz use FIFO method. Under LIFO, recent costs are expensed as COGS; under FIFO, older costs are expensed as COGS.

Required -

a. Given the income statement effects of LIFO versus FIFO, how will balance sheet inventory differ between General Motor and Ford versus Honda and Daimler Benz?

b. Discuss the concept of conservatism. In your opinion, which is more conservative? Explain.

Reference no: EM132550744

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