Question

assume you own a restaurant. What inventory costing method would you prefer, and why? Also, include a discussion as to whether the costing method you would use for your accounting records would follow the actual flow of your inventory.

Answer 1

Answer- In restaurant business we would prefer LIFO method of inventory costing. This method prefer because mostly inventory of a restaurant is perishable items. And have limited shelf life. So these type of inventory if keep in inventory for long time/period then these will spoiled and destroyed.

When we use LIFO method for our restaurant business, then this method also actually uses in actual flow of inventory in restaurant business because major parts of our inventory include perishable goods which have limited shelf life. All restaurant business uses only LIFO method in books of account for inventory valuation and also in also in actual flow of inventory during business process.