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11 the lifo inventory method allocates the most recent inventory purchase costs to c 4298600

 

11. The LIFO inventory method allocates the most recent inventory purchase costs to cost of goods sold. 
12. During periods of decreasing prices, use of the LIFO inventory method will result in a larger amount of inventory than will the use of the FIFO inventory method. 
13. During periods of increasing prices, use of the LIFO inventory method will result in a lower inventory amount on the balance sheet and a lower net income than will use of the FIFO inventory method. 
14. During periods of increasing prices, the LIFO inventory method results in lower income taxes. 
15. During periods of decreasing prices, use of the FIFO inventory method results in lower gross profit than would use of the LIFO method. 
16. The lower-of-cost-or-market (LCM) rule is used because of the conservatism constraint, which allows a departure from the historical cost principle. 
17. The journal entry to write-down inventory under the lower-of-cost-or-market (LCM) rule results in a decrease in both ending inventory and cost of goods sold. 
18. The journal entry to write-down inventory under the lower-of-cost-or-market (LCM) rule results in a debit to cost of goods sold and a credit to inventory. 
19. Inventory turnover is calculated as cost of goods sold divided by average inventory. 
20. Inventory turnover under LIFO is greater than inventory turnover under FIFO when prices are increasing. 
 

 

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