Discussion of Accounting Methods and Management Decisions: The Case of Inventory Costing and Inventory Policy

Abstract

To provide a frame of reference, I should preface my comments with several observations on my personal perspective with respect to the review of Mr. Biddle's study.-First, as a business executive, I have had direct experience with the considerations involved in making a choice between the use of LIFO or FIFO inventory valuation methods. I might add that this involvement has also necessitated the ongoing review and analysis of the impact of such an election. Second, I am personally interested in the economic consequences of accounting choices, both from the standpoint of a businessman and from the viewpoint of a participant in the standard-setting process. Finally, I should note that I do not have the perspective of a statistician experienced in sample structure and mathematical analyses. As a result, my comments are directed toward the approach taken in the study and the possible significance of the results, rather than to the statistical methodology employed. I conclude with a discussion of areas in which future research may be useful.