The treatment of inventory in Britain differs from that of the United States in that
A) the British approach to inventory measurement is much less restrictive.
B) FIFO is not permitted in Britain.
C) LIFO is not permitted in Britain.
D) in the United States, LIFO is not permitted.

Question

Quizplus · Accepted Answer

LIFO (Last-In-First-Out) inventory valuation method is not permitted in Britain, whereas it is an allowed method in the United States. The reason behind this is that LIFO results in lower taxable income and, therefore, lower taxes, which is not in line with the UK tax system. Britain follows the International Financial Reporting Standards (IFRS), which do not allow LIFO as a valuation method for inventory. There is no significant difference in the strictness of inventory measurement between the two countries, and FIFO (First-In-First-Out) is permitted in both.

The Treatment of Inventory in Britain Differs from That of the United