111. If Singleton uses the weighted-average cost flow method, its weighted-average cost per unit would be $8.00.
112. Warner Company purchased two units of a product for $36 and later purchased one more for $40. If the company uses the weighted average cost flow method, and it sold one unit of the product for $60, its gross margin would be $22.00.
113. The Internal Revenue Service allows a company to use LIFO for income tax purposes only if it also uses LIFO for financial reporting.
114. International Financial Reporting Standards (IFRS) do not permit the use of the LIFO cost flow assumption.
115. If a company uses the LIFO cost flow method, it is not required by generally accepted accounting principles to apply the lower-of-cost-or-market rule.
116. If the replacement cost of inventory is greater than its historical cost, the increase in value does not affect the company's financial statements.
117. A loss resulting from application of the lower-of-cost-or-market rule is included in Cost of Goods Sold if the loss is material in amount.
118. If a company applies the lower-of-cost-or-market rule on an aggregate basis, its write-down of inventory is likely to be greater than if it applies the rule to individual items of inventory.
119. If a company overstates its Inventory balance at the end of 2015 due to an error, its Retained Earnings will also be overstated on the 2015 balance sheet.
120. The gross margin method of estimating inventory is not useful in detecting inventory fraud.
121. A discount merchandiser is likely to have a higher inventory turnover than more upscale stores with higher merchandise prices.
122. Company A and Company B are similar retailing businesses. A uses FIFO, and B uses LIFO. In a period of rising prices, B should have a lower inventory turnover than A.