The LIFO conformity rule was promulgated by the SEC to insure that all firms in a given industry use LIFO if a majority of the firms in the industry opt to do so.

Question

Quizplus · Accepted Answer

The LIFO conformity rule was promulgated by the IRS, not the SEC, and it requires firms within the same industry to use the same inventory accounting method (either LIFO or FIFO) to prevent distortions in their financial reporting. There is no requirement for a majority of firms to opt for LIFO in order for this rule to apply.

The LIFO Conformity Rule Was Promulgated by the SEC to Insure