CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Under U.S. GAAP, a company that uses the LIFO method to compute taxable income must use the ______ method for financial reporting.

A. FIFO
B. average cost
C. LIFO
Correct Answer: C

The tax law requires that a company that uses LIFO for tax purposes also use LIFO for financial reporting purposes.

User Contributed Comments 4

User Comment
kalps Clealry this is an important poitn as the question has been asked twice - LIFO for tax means must use LIFO for FR as well
cbb1 LIFO is the only inventory method that if used for tax, must also be used for financial reporting. Otherwise, inventory methods can vary for book and tax.
sha09 is it only U.S. that uses LIFO?
IFRS banned use of LIFO....
bablig Thats right sha09
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