Companies can and often do use different costing methods for financial reporting and tax reporting. An exception to this is the:
A) FIFO inventory valuation method.
B) Matching principle.
C) Consistency concept.
D) LIFO conformity rule.
E) Full disclosure principle.

Question

Quizplus · Accepted Answer

The LIFO conformity rule requires companies to use the same inventory costing method for tax reporting as they do for financial reporting, specifically disallowing the use of LIFO for financial reporting if it is not also used for tax reporting. This is an exception to the possibility of using different costing methods for these two types of reporting. The other choices are generally accepted accounting principles that companies should follow but do not directly address the issue of using different costing methods for financial and tax reporting.

Companies Can and Often Do Use Different Costing Methods for Financial