Which inventory valuation method is most commonly used for tax purposes in the U

Which inventory valuation method is most commonly used for tax purposes in the U.S.?

Which inventory valuation method is most commonly used for tax purposes in the U.S.?

Step 1: Understand what inventory valuation methods are. These are ways to calculate the value of inventory a business has.
Step 2: Learn about LIFO (Last In, First Out). This method assumes that the most recently purchased items are sold first.
Step 3: Recognize that during inflation, prices of goods tend to rise. If a business uses LIFO, it will sell the more expensive items first.
Step 4: Realize that selling the more expensive items first can lead to lower profits on paper, which means lower taxable income.
Step 5: Conclude that because of this tax advantage during inflation, many businesses in the U.S. choose to use LIFO for tax purposes.

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