Which of the following does not properly represent the relation of tax and GAAP accounting?

Multiple Choice

• Companies using FIFO for financial statements prefer FIFO for tax purposes because FIFO results in a lower taxable income.

• If LIFO is used for inventory valuation for taxes, LIFO must also be used for GAAP financial reporting.

• The accounting methods used for tax are permitted to differ from GAAP rules.

• GAAP and tax depreciation expense will rarely be equal.