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Intermediate Accounting 1 (3367) Chapter 8 Quiz Fall 2010. . 1. If both purchases and ending inventory are overstated by the same amount, net income is not affected. a. True b. False 2. If ending inventory is understated, then net income is overstated. a. True b. False 3. In all cases when FIFO is used, the cost of goods sold would be the same whether a perpetual or periodic system is used. a. True b. False 4. Which of the following is a characteristic of a perpetual inventory system? a. Inventory purchases are debited to a Purchases account. b. Cost of goods sold is recorded with each sale. c. Inventory records are not kept for every item. d. Cost of goods sold is determined as the amount of purchases less the change in inventory. 5. Which inventory costing method most closely approximates current cost for each of the following: Ending Inventory Cost of Goods Sold a. FIFO FIFO b. FIFO LIFO c. LIFO FIFO d. LIFO LIFO 6. In the context of dollar-value LIFO, what is a LIFO layer?
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a. The difference between the LIFO inventory and the amount
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