21 according to irs guidelines companies may use fifo for financial reporting and li 4295724
21.According to IRS guidelines, companies may use FIFO for financial reporting and LIFO for tax reporting.
22.An error in the period-end inventory balance will cause an error in the calculation of cost of goods sold.
23.Errors in the period-end inventory balance only affect the current period's records and financial statements.
24.An inventory error is sometimes said to be self-correcting because it yields an offsetting error in the next period.
25.An understatement of the ending inventory balance will overstate cost of goods sold and understate net income.
26.Overstating beginning inventory will understate cost of goods sold and net income.
27.An understatement of ending inventory will cause an understatement of assets and equity on the balance sheet.
28.An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.
29.A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.
30.The inventory turnover ratio is computed by dividing cost of goods sold by average merchandise inventory.