113. International Financial Reporting Standards (IFRS) do not permit the use of the LIFO cost flow assumption.
114. 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.
115. If the replacement cost of inventory is greater than its historical cost, the increase in value does not affect the company's financial statements.
116. 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.
117. If a company applies the lower-of-cost-or-market rule on an aggregate basis, its write-down of inventory is likely to be lower than if it applies the rule to individual items of inventory.
118. If a company overstates its Inventory balance at the end of 2011 due to an error, its Retained Earnings will also be overstated on the 2011 balance sheet.
119. The gross profit method of estimating inventory can be used to help detect inventory fraud.
120. A discount merchandiser is likely to have a higher inventory turnover than more upscale stores with higher merchandise prices.
121. Company A and Company B are similar retailing businesses. A uses FIFO, and B uses LIFO. In a period of rising prices, A should have a higher inventory turnover than A.