True/False
1. When prices are rising, FIFO results in a higher ending inventory than LIFO.
True False
2. We can use the LIFO inventory method only if we know that the newest units are always sold first.
True False
3. Goods in transit would be included in the ending inventory of the buyer and the seller.
True False
4. Under the LCM basis, market is defined as current replacement cost, not selling price.
True False
5. When beginning inventory is understated, net income will be understated.
True False
6. Cost of goods sold purchased less the ending inventory equals cost of goods sold.
True False
7. The LIFO method assumes that the earliest goods purchased are the first to be sold.
True False
8. Inventory turnover is computed by dividing the cost of goods sold by the ending inventory.
True False
*9. The gross profit method estimates the cost of ending inventory by applying a gross profit rate to net sales.
True False
*10. The retail inventory method and the gross profit method are both methods of inventory estimation.
True False
