ch8 - ch8 Student 1 Physical counts of inventory are never...

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ch8 Student: ___________________________________________________________________________ 1. Physical counts of inventory are never done with perpetual inventory systems. True False 2. The main difference between perpetual and periodic inventory systems is the timing of the allocation of costs between inventory and cost of goods sold. True False 3. LIFO periodic and LIFO perpetual always produce the same amounts for ending inventory. True False 4. FIFO periodic and FIFO perpetual always produce the same amounts for cost of goods sold. True False 5. Cost of goods on consignment is included in the consignee's inventory until sold. True False 6. Shipping charges on outgoing goods are included in cost of goods sold. True False 7. Net purchases are reduced for discounts taken whether the net method is used or the gross method is used. True False 8. The choice of cost flow assumption (FIFO, LIFO, or average) does not depend on the actual physical flow of the product. True False 9. Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold. True False 10. During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory. True False 11. LIFO always provides a better match of revenue and expense than does FIFO. True False
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12. Unit LIFO is more costly to implement than dollar-value LIFO. True False 13. LIFO liquidation profits occur when inventory quantity declines and costs are rising. True False 14. The gross profit ratio is calculated by dividing gross profit by average inventory. True False 15. Dollar-value LIFO eliminates the risk of LIFO liquidations. True False 16. A company that prepares its financial statements according to International Financial Reporting Standards can use all of the same inventory valuation methods as a company that prepares its statements under U.S. GAAP. True False 17. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. 1. Net purchases Adjusts inventory at the end of the period. __ __ 2. LIFO conformity rule Allocated between ending inventory and cost of goods sold. __ __ 3. Periodic inventory system Reduced by discounts taken under both gross and net methods. __ __ 4. Cost of Goods available for sale Inventory ready for sale. __ __ 5. Finished goods LIFO must be used for financial reporting if elected for taxes. __ __
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18. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. 1. Perpetual inventory system Considered a product cost. __ __ 2. Physical flow Continuously records changes in inventory. __ __ 3. LIFO liquidation Captured by FIFO for perishable products. __ __ 4. Freight-in Reduces the quality of current period earnings information. __ __ 5. LIFO pools Units grouped according to similarities. __ __ 19. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase.
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