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Problem: Vero Limited is a company selling office furniture. The newly appointed managing director discussed with the accountant regarding the changes of the inventory costing method. He wondered why the company changed the inventory costing method from FIFO in 2017 to LIFO in 2018. Subsequently, the company switched back to FIFO in 2019.
Required:
Question 1: Discuss which accounting principle would be violated if Vero Limited changed the inventory costing method from year to year.
Question 2: Discuss the implications and consequences of changing the inventory costing method from year to year.
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