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121 the adjustment to write down inventory from cost to its lower market value inclu 4296468

 

121. The adjustment to write down inventory from cost to its lower market value includes a debit to Cost of Goods Sold and a credit to Inventory. 
 

122. The use of the lower-of-cost-or-market method to report inventory is an example of conservatism in financial reporting. 
 

123. The inventory turnover ratio equals cost of goods sold divided by average inventory. 
 

124. Generally, a higher inventory turnover ratio reflects positively on a company's ability to manage its inventory. 
 

125. A company that has average inventory of $500 and cost of goods sold of $2,000 would have an inventory turnover ratio of 0.25. 
 

126. The gross profit ratio measures the amount by which the sale price of inventory exceeds its cost per dollar of sales. 
 

127. Generally, a lower gross profit ratio reflects positively on a company's ability to manage its inventory. 
 

128. Using LIFO, the amount reported for ending inventory does not differ depending on whether a company uses a periodic system or a perpetual system. 
 

129. A periodic inventory system does not continually modify inventory amounts, but instead adjusts for purchases and sales of inventory at the end of the reporting period based on a physical count of inventory on hand. 
 

130. Overstating ending inventory in the current year causes net income in the current year to be overstated. 
 

 

 

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