If a firm uses the FIFO method of inventory valuation for tax purposes, it must use the FIFO method for financial accounting.

Question

Quizplus · Accepted Answer

The firm may choose to use different methods for tax and financial accounting purposes, as long as it clearly discloses the reasoning behind the choice and the effect on financial statements. However, it is generally beneficial to use the same method for both tax and financial accounting purposes to avoid confusion and discrepancies.

If a Firm Uses the FIFO Method of Inventory Valuation