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A company can choose to use a variety of inventory valuation methods under GAAP. Would the...

A company can choose to use a variety of inventory valuation methods under GAAP. Would the use of one certain method require more testing of controls than another method? Why or why not?

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The methods of inventory valuations available at a company's disposal are FIFO, LIFO and weighted average. If the company uses the weighted average method, the valuation of cost of goods sold and inventory is balanced. However, usage of FIFO and LIFO will require extensive testing of controls, as valuation of cost of goods sold and inventory depends on rising or falling price. Testing of controls would be required to ensure that the finacial statements project a correct picture.

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