Which of the Following Statements Regarding UNICAP Is Incorrect

question 117

Multiple Choice

Which of the following statements regarding UNICAP is incorrect?

• A)The UNICAP rules result in more costs being included in inventory for tax purposes than for financial accounting.
• B)Taxpayers with gross receipts averaging more than $10,000,000 or more for the prior three years must apply the UNICAP provisions.
• C)Interest must be included in inventory if the property produced is real property or long-lived property.
• D)UNICAP requires that advertising and selling costs be allocated between inventory and cost of sales.

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Definitions:

Accounts Receivable

Funds that customers owe to a company for products or services already provided but not yet compensated.

Sales Revenue

The total income received by a company from its sales of goods or services, before any expenses are subtracted.

Prepaid Expenses

Costs for goods or services that are paid for in advance of being used or consumed, recognized as assets on a balance sheet.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.