Wall Street Journal Research Paper Example | Topics and Well Written Essays - 500 words

Wall Street Journal - Research Paper Example These bases are First-in, first-out (FIFO) and Last-in, first-out (LIFO). Kohl’s Corporation Department Store earnings fell by 17%. Its operator’s margin was hurt by markdowns to clear out inventory. Their rival’s dismal performance was projected to fair well for them but unfortunately, this was not the case. Kohl’s Corp. fell short to capitalize on it and to some extent, it contributed in its poor performance. Chief Executive, Kevin Mansell, confessed that growth was not at the rate they had planned. They did not serve their customers at the standard they had set for themselves. Kohl’s Corp. has about 1,146 stores in 49 states, their main competitors being Macys Inc. and J.C. Penney (Talley & Tess). First-in, first-out (FIFO) is the most common inventory accounting method which assumes that the oldest inventory is used first. This method reflects how transactions actually occur. Accounting rules do not necessitate the inventory accounting method used by the company to be the same as the physical movement of goods but for companies selling via inventory supplies frequently, complexity in record-keeping is significantly reduced due to the matching movement of goods to the accounting method used. During periods when prices are rising, inventory cost is higher as compared with companies using LIFO method (Tracy 12). Last-in, first-out (LIFO) is another method of accounting for inventories. LIFO method assumes that the most recently purchased inventory is used first, which rarely matches the physical movement of inventories. Generally, when prices go up over time during the accounting period, the most expensive items in inventory are sold, reducing the net income, thus a lower tax liability becomes the end result. Companies which opt for LIFO valuation should be conscious of layering effect which can cause high tax liabilities which are not expected during high