Dan has been talking with his CPA. He doesn't understand why he should choose one inventory method over the other. Dan is also confused about perpetual and periodic. Write a memo to Dan explaining the difference between Periodic and Perpetual inventory systems. In addition, explain to Dan the differences between the following inventory methods: FIFO, LIFO, Specific Identification, and Average Cost. Give Dan your opinion on which inventory system he should use (periodic or perpetual) and the inventory method he should use. Back up your opinion/advice with solid accounting reasons. Explain to Dan why the inventory method he chooses will need to remain in effect indefinitely. To put it another way, explain changing inventory methods, can they be changed? What are the requirements to change them?

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