Final answer:
While businesses can change their inventory costing method, this change must be justifiable and disclosed, adhering to GAAP or IFRS guidelines. Frequent changes are not recommended due to potential confusion for stakeholders, and consistency is generally preferred for comparability of financial records.
Step-by-step explanation:
Can a business change from one inventory costing method to another any time they wish? Essentially, businesses have the flexibility to change their inventory costing methods, however, such a change must typically be justifiable as a better representation of the financial situation and be disclosed to the company's stakeholders.
The Generally Accepted Accounting Principles (GAAP) in the United States, or International Financial Reporting Standards (IFRS) elsewhere, often guide how and when an inventory costing change should take place. Regulatory approval may be necessary, and tax implications should also be considered.
Frequent changes in inventory costing methods are not advisable due to the potential to confuse investors and analysts who track a company's performance over time. While businesses can operate in the short run with relative ease, making changes for the long run may require more strategic planning and consideration of market demand and competition.
Sometimes, external factors such as new developments in production technology can impact long-term operations and costs, leading to necessary changes in accounting methods, including inventory costing. However, consistency is typically preferred to maintain comparability of financial statements over time.