Final answer:
Companies do not have to use the same inventory cost flow method for financial statements and federal income tax reporting, except when the LIFO method is used for taxes, as the LIFO conformity rule requires it to be used in both cases.
Step-by-step explanation:
The statement that companies must use the same inventory cost flow method for their financial statements as they use for federal income tax reporting is False. For financial reporting purposes, companies can choose any inventory cost flow method that conforms to Generally Accepted Accounting Principles (GAAP), such as FIFO, LIFO, or Average Cost. However, if a company chooses to use the LIFO (Last In, First Out) method for tax purposes, the Internal Revenue Service (IRS) requires them to use LIFO for financial reporting as well, which is known as the LIFO conformity rule. This rule is an exception to the general practice that allows different methods for financial reporting and tax purposes.