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:

Profitable Level

The point at which the revenue from sales exceeds the costs involved in production or procurement.

Market Price

Market Price is the current price at which a good or service can be bought or sold in a marketplace.

Short Run

This is a period during which at least one factor of production is fixed, typically used in economic analyses to describe immediate effects of changes.

Produce

Agricultural products, especially fresh fruits and vegetables, that are grown for consumption.