During 20X8, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 20X9, Vanguard changes back to the FIFO method and the following year Vanguard switches back to LIFO again.
1. What would you think of a company’s ethics if it changed accounting methods every year?
2. What accounting principle would changing methods every year violate?
3. Who can be harmed when a company changes its accounting methods too often? How?