Acct chapter 8 - Assets Inventory - Activity T or F

COGS is only correct expensed when the specific identification method is used

FIFO is preffered for maximizing income since the price of goods, due to inflation, is generally always rising in the long term

Purchase and purchase discounts are both debited to inventory

The principle by which firms cannot change their inventory cost method annually is the Disclosure principle

When inventoryy shrinkage occurs material losses in value are debited to COGS

If ending inventory is overstated in period 1, that means that COGS will be overstated in period 2

The gross profit method is used in lieu of making actual physical counts of inventory, most typically for interim financial statements

Inventory Turnover measures how efficiently a firm is selling their inventory throughout the year

As a measure of liquidity, Days-Sales-in-Inventory can be calculated by dividing inventory turnover by 365 days

Just in Time inventory systems necessitate counting inventory right before financial statement preparation to ensure the most accurate count of inventory

If all inventory is sold, average cost will have yielded higher COGS than LIFO, but not as much as FIFO