In order to prevent companies from selecting inventory costing methods just to avoid tax, the Canada Revenue Agency:
A)allows only the FIFO method to be used.
B)allows only average cost to be used.
C)places restrictions on the company's ability to change methods.
D)accepts any method that is used for accounting purposes.

Question

Quizplus · Accepted Answer

The Canada Revenue Agency places restrictions on the company's ability to change methods in order to prevent any manipulation of inventory costing solely for tax purposes. This ensures that companies are using appropriate and consistent methods that accurately reflect their inventory costs.

In Order to Prevent Companies from Selecting Inventory Costing Methods