Fifo method of inventory from lifo

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Ace and Jake own a retail shop called AJ's Bikes. Over the past five years, the shop had reported its inventory under the LIFO method. In their year end review, Ace and Jake were concerned about their high cost of goods sold and low gross profit. Since they wanted to obtain financing to purchase additional stores, the low profit margin concerned them. Ace, who had taken some accounting classes in college, remember that if the shop used the FIFO method of inventory valuation, they could record a higher gross profit.

Can Ace and Jake change to the FIFO method of inventory from LIFO? Are any ethical issues involved?

Reference no: EM13153360

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