Which of the following inventory methods when used for income tax purposes must also be used for reporting purposes?
A)Specific identification
B)LIFO
C)FIFO
D)Average-cost

Question

Quizplus · Accepted Answer

The LIFO (Last In, First Out) method, when chosen for income tax purposes, must also be used for financial reporting purposes according to the Internal Revenue Service (IRS) regulations. This consistency requirement ensures that the financial statements presented to shareholders and the tax returns filed with the IRS are prepared using the same inventory accounting method, providing a more accurate and consistent view of a company's financial health.

Which of the Following Inventory Methods When Used for Income