Final answer:
The change in the LIFO Reserve from one period to the next is indeed recorded as an adjustment to Cost of Goods Sold, which is true. This reflects the difference in inventory cost that arises from using the LIFO method rather than FIFO, affecting the company's gross profit.
Step-by-step explanation:
The statement that the change in the LIFO (Last-In, First-Out) Reserve from one period to the next is recorded as an adjustment to Cost of Goods Sold (COGS) is true. When a company using the LIFO inventory method reports its financial results, the LIFO Reserve reflects the difference between the LIFO inventory method and the FIFO (First-In, First-Out) inventory method. A change in the LIFO Reserve indicates that the costs of the products sold during the period (as recorded under LIFO) have changed compared to what they would have been under FIFO. This change must be reflected in the COGS to accurately represent the cost of inventory sold during the period.
For example, if the LIFO Reserve increases during a period of rising prices, this implies that the LIFO COGS is higher than it would have been under FIFO. This increase in the LIFO Reserve would lead to a corresponding increase in COGS, ultimately affecting the company's reported gross profit negatively. Conversely, if the LIFO Reserve decreases, COGS would be adjusted downwards, positively affecting gross profit.