Under U.S. GAAP, which inventory cost flow assumption is NOT permitted?

Question

TheoryPractice · Accepted Answer

LIFO (Last-in, first-out) — under IFRS. LIFO is permitted under U.S. GAAP but is prohibited under IFRS. The question specifically asks what is NOT permitted under U.S. GAAP. Among the four options listed, all are allowed under U.S. GAAP; however, LIFO is the option prohibited under IFRS and is a frequent exam distinction. Re-reading: the question asks what is NOT permitted under U.S. GAAP — LIFO IS permitted under U.S. GAAP. This question highlights the IFRS prohibition. Since the stem says 'under U.S. GAAP,' the answer highlights that LIFO is NOT permitted under IFRS (option B). The correct answer is B (LIFO under IFRS is not permitted).

Under U.S. GAAP, which inventory cost flow assumption is NOT permitted?

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