Asked by Jennifer Esparza on Jun 03, 2024
Verified
U.S.tax rules specify that if LIFO is used for tax purposes,the external financial statements must also use LIFO.
LIFO
Last In, First Out, an inventory valuation method where the most recently produced or acquired items are the first to be expensed.
U.S. Tax Rules
The laws and regulations governing the taxation of individuals and corporations in the United States.
- Acquire knowledge on the taxation repercussions and legislations related to differing approaches in inventory accounting, emphasizing specifically on Last-In, First-Out (LIFO).
Verified Answer
TN
Tiffany NguyenJun 09, 2024
Final Answer :
True
Explanation :
This is true. The IRS requires consistency in accounting methods between tax and financial reporting. If LIFO is used for tax purposes, it must also be used for external financial statements.
Learning Objectives
- Acquire knowledge on the taxation repercussions and legislations related to differing approaches in inventory accounting, emphasizing specifically on Last-In, First-Out (LIFO).