Abstract The article focuses on economic circumstances as a justification for alternative inventory pricing methods. Accounting literature abounds with pros and cons of narrowing the areas of accounting alternatives. On the one hand, there are some who maintain that uniformity is necessary for financial statement comparability. Others insist that flexibility must be maintained because no two entities are identical and different procedures and methods are necessary to depict results of different entitles. One area of accounting alternatives is inventory pricing methods. Justification for the use of alternative inventory pricing methods appears to fall into one of the following groups. Relating cost flows to physical flows, income tax saving, differences in management philosophy, differences in economic circumstances. The American Institute of Certified Public Accountants has stated that different methods of inventory pricing are appropriate in different circumstances. While the phrase differences in circumstances has not been defined precisely, several studies have examined circumstances under which a particular accounting procedure would be preferred.
Lanny G. Chsteen (Thu,) studied this question.