Asked by Anshul Suryavanshi on Jul 29, 2024
Verified
Widely used for tax purposes
A)FIFO
B)LIFO
C)Weighted average
Tax Purposes
The reasonings or rationalizations related to the computation and payment of taxes, often guiding how financial transactions are structured or reported.
LIFO
Last-In, First-Out, an inventory valuation method where the most recently produced items are recorded as sold first.
Cost Flow Assumption
Accounting methods that companies use to assign costs to inventory and cost of goods sold, such as FIFO, LIFO, and weighted average cost.
- Comprehend the different assumptions regarding cost flow and their utilization in determining the value of inventory.
Verified Answer
SA
Samer AlanbakiJul 31, 2024
Final Answer :
b
Explanation :
LIFO (Last-In, First-Out) is widely used for tax purposes because it can reduce taxable income in times of inflation by matching the most recent higher costs against current revenues.
Learning Objectives
- Comprehend the different assumptions regarding cost flow and their utilization in determining the value of inventory.