True or False:$-$

$1-$ Assuming the taxpayer fails to meet any exceptions attributable to gross receipts limitations$,$ the accrual method must be used for purchases and sales of inventory even if the taxpayer does not have inventory at year end.

True

False

$2-$ All items purchased for sale are included in the definition of inventory.

True

False

$3-$ Raw materials and supplies are included in inventory if they were acquired for sale at a profit or will physically become part of merchandise intended for sale at a profit and included in inventory.

True

False

$4-$ Inventory does not include real estate held for sale to customers.

True

False

$5-$ The regulations place little weight on the financial accounting for inventories $($e$.$g$.$ GAAP$)$ when determining if the method used comports to be the best accounting practice.

True

False

$6-$ Any method used for GAAP accounting for inventories is presumed to clearly reflect income and may not be challenged by the IRS.

True

False

$7-$Two basic facets of tax accounting for inventories are $($i$)$ the method of valuation and $($ii$)$ the cost flow assumption.

True

False

$8-$ Trade discounts represent reductions in the invoice price for prompt payment

True

False

$9-$ Specific identification is allowed when practicable but taxpayers may otherwise use another cost flow assumption such as FIFO or LIFO.

True

False

$10-$ Direct costing is allowable for tax purposes but is expressly prohibited for financial accounting purposes.

True

False