Asked by Gracia Malohing on Jun 06, 2024
Verified
Which one of the following statements is true?
A) Income manipulation is difficult under LIFO.
B) Accounting principles do not require that the inventory cost flow approximate the physical flow of goods.
C) Companies may use LIFO for tax purposes and FIFO in the financial statements.
D) In periods of declining prices, LIFO will result in the payment of lower income taxes.
Income Manipulation
The act of altering financial statements to present a misleading view of a company's financial health or performance.
Accounting Principles
Rules and guidelines that companies must follow when reporting financial data.
LIFO for Tax
Last In, First Out method for tax purposes, an inventory valuation method where the latest items added to inventory are considered sold first, impacting taxation.
- Investigate the effect of inventory cost flow assumptions on tax implications.
Verified Answer
Learning Objectives
- Investigate the effect of inventory cost flow assumptions on tax implications.
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