Which of the Following Statements Is True

question 81

Multiple Choice

Which of the following statements is true?

• A) A company must use the FIFO cost flow assumption for taxes as well as for financial accounting and reporting.
• B) A company may use FIFO for inventory valuation purposes on the balance sheet provided that LIFO cost of goods sold is reported on the income statement.
• C) Application of LIFO for financial reporting purposes must strictly follow IRS regulations relating to LIFO.
• D) LIFO is the only inventory method that must be used for financial reporting purposes if used for tax purposes.

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Definitions:

Dummy Variable

A variable used in regression analysis that assumes the value 0 or 1 to indicate the absence or presence of some categorical effect.

Independent Variable

A variable that is manipulated to determine its effect on a dependent variable within an experimental study.

3-ethyl-3-methylhexane

A branched alkane with the formula C8H18, having an ethyl and a methyl group on the third carbon of the hexane chain.

Ethyl

A univalent radical, C2H5, derived from ethane and forming many compounds, used in chemical synthesis.