Which of the following is true regarding the use of LIFO for inventory valuation?
A) If LIFO is used for external financial reporting, then it must also be used for internal reports.
B) For purposes of external financial reporting, LIFO may not be used with the lower of cost or market approach.
C) If LIFO is used for external financial reporting, then it cannot be used for tax purposes.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

The statements provided as options A, B, and C are incorrect regarding the use of LIFO (Last-In, First-Out) for inventory valuation, making option D the correct choice. Companies can choose different inventory methods for internal and external reporting purposes (contrary to A), LIFO can be used with the lower of cost or market approach for external reporting (contrary to B), and if LIFO is used for financial reporting, it can indeed be used for tax purposes in jurisdictions that allow it, such as the United States (contrary to C).

Which of the Following Is True Regarding the Use of LIFO