Acctg Fundamentals

The more inventory a company has in stock, the greater the company's profit.

• True

• False

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods.

• True

• False

The first-in, first-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

• True

• False

Under the lower-of-cost-or-market basis, market is defined as current replacement cost.

• True

• False

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

• True

• False

An error that overstates the ending inventory will also cause net income for the period to be overstated.

• True

• False

The pool of inventory costs consists of the beginning inventory plus the cost of goods purchased.

• True

• False

The lower-of-cost-or-market basis is an example of the accounting concept of conservatism.

• True

• False

In a perpetual inventory system, the cost of goods sold under the FIFO method is based on the cost of the latest goods on hand during the period.

• True

• False

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

• True

• False