A business uses the same inventory method for both financial reporting and tax reporting.Because of the UNICAP requirement,ending inventory is likely to be
A)higher for tax reporting purposes than for financial reporting purposes.
B)higher for financial reporting purposes than for tax reporting purposes.
C)the same for both financial and tax reporting as UNICAP requires uniform inventory accounting methods.
D)none of the above.

Question

Quizplus · Accepted Answer

UNICAP (Uniform Capitalization) requires certain costs that are normally expensed to be capitalized into inventory costs for tax purposes. This results in a higher ending inventory value for tax reporting purposes compared to financial reporting purposes since financial reporting doesn't have UNICAP requirements.

A Business Uses the Same Inventory Method for Both Financial