Which of the Following Statements About the Uniform Capitalization (Unicap)

question 55

Multiple Choice

Which of the following statements about the uniform capitalization (unicap) rules is false?

• A) The unicap rules determine the annual costs that firms must capitalize to inventory for tax purposes.
• B) The unicap rules may require capitalization of more indirect costs to inventory for tax purposes than for book purposes.
• C) The unicap rules may result in a book/tax difference for cost of goods sold.
• D) The unicap rules apply to all taxpayers with inventory, regardless of size.

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Definitions:

Market Price

The price of a good or service determined by the supply and demand conditions in a competitive marketplace, reflecting what consumers are willing to pay and sellers accept.

Short Run

A period in economics during which at least one factor of production is fixed and cannot be changed.

Short Run Supply Curve

A graphical representation showing the quantity of goods or services that producers are willing and able to sell at different prices over a short period, assuming some production factors are fixed.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit changes as more units are produced.