Homework answers / question archive / Louisiana State University, Shreveport ACCT 701 Quiz 4 TRUE/FALSE QUESTIONS 1)If ending inventory is understated, the cost of goods is understated, resulting in an overstatement of gross margin, net income, and retained earnings?   When inventory is misstated in the current year, companies carry that misstatement forward into the next year? FIFO assumes that the cost of the first goods purchased are those charged to cost of goods sold when goods are sold

Louisiana State University, Shreveport ACCT 701 Quiz 4 TRUE/FALSE QUESTIONS 1)If ending inventory is understated, the cost of goods is understated, resulting in an overstatement of gross margin, net income, and retained earnings?   When inventory is misstated in the current year, companies carry that misstatement forward into the next year? FIFO assumes that the cost of the first goods purchased are those charged to cost of goods sold when goods are sold

Accounting

Share With

2. When inventory is misstated in the current year, companies carry that misstatement forward into the next year?
3. FIFO assumes that the cost of the first goods purchased are those charged to cost of goods sold when goods are sold. During periods of rising prices FIFO creates higher net income since the cost charged to cost of goods sold are lower?
4. Specific identification attaches the actual cost of each unit of product to units in ending inventory and costs of goods sold?
5. LIFO: ending inventory consists of the oldest costs?
6. Perpetual inventory procedure requires an entry to Merchandise Inventory whenever goods are purchased, returned, sold or otherwise adjusted, so that inventory records reflect actual units on hand at all times. Thus, an entry is required to record cost of goods sold for each sale?
7. Inventory Turnover Rate = Cost of Goods Sold/ Average Inventory?
8. Inventory turnover measures the efficiency of the firm in managing and selling inventory. It gauges the liquidity of the firm’s inventory?
9. Overstated ending inventory results in an overstatement of cost of goods sold and an understatement of gross margin and net income?
10. In a period of rising prices, FIFO results in the lowest cost of goods sold?