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Article: Accounting methods and management decisions - the case of inventory costing and inventory policy

TitleAccounting methods and management decisions - the case of inventory costing and inventory policy
Authors
Issue Date1980
Citation
Journal Of Accounting Research, 1980, v. 18, p. 235-280 How to Cite?
AbstractThis study investigates whether associations consistent with LIFO-FIFO tax incentives exist between management choices to adopt or not adopt the LIFO inventory costing method and characteristics of firms' year-end inventories. Both pre- and postchoice characteristics are ex- amined. Because the LIFO-FIFO choice is voluntary, a postchoice association would be consistent with managers both anticipating future inventory characteristics when making a LIFO-FIFO choice and changing inventory management policies in response to that choice. Evidence consistent with the hypothesis that LIFO adoptions are associated with changes in inventory management policies would have important macroeconomic implications. Zarnowitz and Moore [1977] have argued that a failure to recognize the major shift in inventory costing methods which occurred in 1973 and 1974 (primarily FIFO to LIFO) resulted in an underestimation of inventory accumulations by the U.S. Department of Commerce. This underestimation resulted from the different procedures used under LIFO and FIFO to assign costs to inventory units. While this effect of LIFO-FIFO choices can bias macroeconomic measurements and forecasts, an associated change in inventory management policies by a large number of firms could directly affect underlying macroeconomic stocks and flows.
Persistent Identifierhttp://hdl.handle.net/10722/128999
ISSN
2015 Impact Factor: 2.243
2015 SCImago Journal Rankings: 5.733
SSRN
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorBiddle, GCen_US
dc.date.accessioned2010-12-09T03:05:31Z-
dc.date.available2010-12-09T03:05:31Z-
dc.date.issued1980en_US
dc.identifier.citationJournal Of Accounting Research, 1980, v. 18, p. 235-280en_US
dc.identifier.issn0021-8456en_US
dc.identifier.urihttp://hdl.handle.net/10722/128999-
dc.description.abstractThis study investigates whether associations consistent with LIFO-FIFO tax incentives exist between management choices to adopt or not adopt the LIFO inventory costing method and characteristics of firms' year-end inventories. Both pre- and postchoice characteristics are ex- amined. Because the LIFO-FIFO choice is voluntary, a postchoice association would be consistent with managers both anticipating future inventory characteristics when making a LIFO-FIFO choice and changing inventory management policies in response to that choice. Evidence consistent with the hypothesis that LIFO adoptions are associated with changes in inventory management policies would have important macroeconomic implications. Zarnowitz and Moore [1977] have argued that a failure to recognize the major shift in inventory costing methods which occurred in 1973 and 1974 (primarily FIFO to LIFO) resulted in an underestimation of inventory accumulations by the U.S. Department of Commerce. This underestimation resulted from the different procedures used under LIFO and FIFO to assign costs to inventory units. While this effect of LIFO-FIFO choices can bias macroeconomic measurements and forecasts, an associated change in inventory management policies by a large number of firms could directly affect underlying macroeconomic stocks and flows.-
dc.languageengen_US
dc.relation.ispartofJournal Of Accounting Researchen_US
dc.titleAccounting methods and management decisions - the case of inventory costing and inventory policyen_US
dc.typeArticleen_US
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0021-8456&volume=18&spage=235&epage=&date=1980&atitle=ACCOUNTING+METHODS+AND+MANAGEMENT+DECISIONS+-+THE+CASE+OF+INVENTORY+COSTING+AND+INVENTORY+POLICYen_US
dc.identifier.emailBiddle, GC:biddle@hku.hken_US
dc.identifier.authorityBiddle, GC=rp00230en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.2307/2490341-
dc.relation.referenceshttp://apps.isiknowledge.com/CitedRefList.do?product=WOS&search_mode=CitedRefList&db_id=WOS&UT=A1980LP08500019en_US
dc.identifier.volume18en_US
dc.identifier.spage235en_US
dc.identifier.epage280en_US
dc.identifier.isiWOS:A1980LP08500019en_US
dc.identifier.ssrn1677327-

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