Accounting CBE Practice Exam 2026 – All-in-One Guide to Mastering Your Certification!

Under IFRS, the allowed ways to cost inventory are FIFO, weighted average cost, and specific identification. LIFO is generally not permitted. The reason is that LIFO assigns the newest costs to cost of goods sold and leaves older costs in ending inventory, which can produce results that don’t reflect the actual flow of goods and can vary widely with price changes. This makes financial statements less comparable and less reliable across different entities and periods. IFRS emphasizes a cost measurement that reflects a systematic, reasonable method and the lower of cost and net realizable value, and the methods that align with that goal are FIFO, weighted average, and specific identification.