Final answer:
It is true that a company can use LIFO or Weighted Average for financial reporting even if its goods flow on a FIFO basis. These inventory valuation methods are separate from physical inventory flow and are chosen based on financial strategy and tax planning.
Step-by-step explanation:
True or False: A company may use LIFO or Weighted Average for financial reporting even if its goods flow physically on a FIFO basis. This statement is true. Although the physical flow of goods may be on a First-In, First-Out (FIFO) basis, for financial reporting purposes, a company can choose to use different inventory valuation methods such as Last-In, First-Out (LIFO) or the Weighted Average method. These accounting methods are used to value inventory and cost of goods sold on financial statements, and they can be selected based on which method aligns best with the company's financial strategy and tax planning, regardless of the physical movement of goods.
For instance, if Fan 1 was purchased in April and cost $76 and inventory item 101 purchased in November costs $110, the company could still choose LIFO or Weighted Average to account for their cost of goods sold and ending inventory valuation when they prepare their financial statements. These methods may lead to different valuations than FIFO, which might have tax or income statement implications for the company.