Louisiana State University, Shreveport ACCT 701 Chapter 8 Self- Test Indicate whether each of the following statements is true or false. 1)Overstated ending inventory results in an overstatement of cost of goods sold and an understatement of gross margin and net income. In a period of rising prices, FIFO results in the lowest cost of goods sold. Under LCM, inventory is written down to market value when the market value is less than the cost, and inventory is written up to market value when the market value is greater than the cost. Under the gross margin method, an estimate must be made of gross margin to determine estimated cost of goods sold and estimated ending inventory. To use the retail inventory method, both cost and retail prices must be known for the goods available for sale. Under perpetual procedure, cost of goods sold is determined as a result of the closing entries made at the end of the period.

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Louisiana State University, Shreveport ACCT 701 Chapter 8 Self- Test Indicate whether each of the following statements is true or false

Accounting Jul 03, 2021

Louisiana State University, Shreveport

ACCT 701

Chapter 8 Self- Test Indicate whether each of the following statements is true or false.

1)Overstated ending inventory results in an overstatement of cost of goods sold and an

understatement of gross margin and net income.

In a period of rising prices, FIFO results in the lowest cost of goods sold.

Under LCM, inventory is written down to market value when the market value is less than the cost, and inventory is written up to market value when the market value is greater than the cost.

Under the gross margin method, an estimate must be made of gross margin to determine estimated cost of goods sold and estimated ending inventory.

To use the retail inventory method, both cost and retail prices must be known for the goods available for sale.
Under perpetual procedure, cost of goods sold is determined as a result of the closing entries made at the end of the period.

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