1.Duckwall ALCO Stores, Inc. operates general merchandise retail stores throughout the central portion of the U.S. The following disclosure notes were included in recent financial statements:
Note 1. (c) Inventories (in part)
In the fourth quarter of fiscal year 2011, the Company elected to change its method of accounting for inventory to the first in, first out (FIFO) method from the last in, first out (LIFO) method. The Company believes the FIFO method is preferable to the LIFO method as it better matches the current value of inventory in the company's balance sheet and provides a better matching of revenues and expenses.
Note 2. Inventories (in part)
In the fourth quarter of fiscal 2011, the Company elected to change its method of accounting for inventory from LIFO to FIFO. The Company applied this change in method of inventory by retrospectively adjusting the prior years' financial statements.
Required:
Why does GAAP require Duckwall ALCO to retrospectively adjust prior periods' financial statements for this type of accounting change?