A Taxpayer May Use the FIFO or Average Cost Methods

question 73

True/False

A taxpayer may use the FIFO or average cost methods for financial statement purposes,while using the LIFO method for tax purposes.

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Definitions:

Utilities

Essential services provided to the public, including electricity, gas, water, and sewage systems.

Break-even Point

The point at which total costs and total revenue are equal, meaning no net loss or gain is incurred by the business.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance expenses.

Unit Price

The cost of a single unit of product or measure, which enables comparison of costs among different sizes or types of packages.