PART I. True or False Questions 1. The choice of an inventory costing method has

Question

PART I. True or False Questions 1. The choice of an inventory costing method has no significant impact on the financial statements. Answer 2. Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first. Answer: 3. The two main types of inventory systems are the periodic system and the gross margin method. Answer 4. Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory. Answer:- 5. Under a periodic inventory system, cost of goods available for sale is ending inventory plus purchases Answer:- 6. The average cost method will always yield results between FIFO and LIFO. Answer: 7. During periods of decreasing costs, the use of the LIFO method of costin inventory will result in a lower amount of net income than would result from the use of the FIFO method. Answer:

Explanation / Answer

1) The correct answer is false

Explanation:- The choice of inventory costing method has a significant impact on the financial statement.

2) True

Explanation :- Under LIFO, the most recent purchases are assumed to be the first goods sold; thus, cost of goods sold contains relatively current costs.

3) False

Explanation :- The two principal systems of accounting for merchandise inventory are the periodic and the perpetual systems.

4) False

Explanation : - The FIFO inventory costing method assigns the most recent cost to ending inventory.

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