The LIFO Conformity Rule States That If LIFO Is Used

question 100

Multiple Choice

The LIFO Conformity Rule states that if LIFO is used for:

• A) One class of inventory, it must be used for all classes of inventory.
• B) Tax purposes, it must be used for financial reporting.
• C) One company in an affiliated group, it must be used by all companies in an affiliated group.
• D) Domestic companies, it must be used by foreign partners.

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Definitions:

Indirect Materials

Materials used in the production process that cannot be directly traced to a specific product, such as lubricants and cleaning supplies for machinery.

Job-Order Costing

A costing method used to calculate the cost of producing each specific order or job, making it suited for custom, one-off products.

Work In Process

Inventory that includes goods that are in the production process but are not yet completed.

Schedule Of Cost Of Goods Manufactured

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods.