The LIFO conformity rule states that
A)if LIFO is used for tax purposes,the external financial statements must also use LIFO.
B)if FIFO is used for tax purposes,the external financial statements must also use FIFO.
C)if LIFO is used for tax purposes,the external financial statements must also use FIFO.
D)if FIFO is used for tax purposes,the external financial statements must also use LIFO.

Question

Quizplus · Accepted Answer

The LIFO conformity rule states that if a company uses LIFO (Last-In-First-Out) inventory accounting method in its tax returns, it must also use LIFO for its external financial reporting purposes. This rule is designed to ensure consistency between a company's reporting for tax purposes and its reporting for financial statement purposes. Therefore, option A is the correct answer. Option B, C, and D are incorrect as they do not align with the LIFO conformity rule.

The LIFO Conformity Rule States That