21. In a period of rising prices, the statement of financial position will report a higher inventory amount if FIFO, rather than average-costing, is the cost flow assumption used.
22. The accounting concept of prudence dictates that the accounting principle used should be the one least likely to overstate assets and income.
23. Accountants believe that the write down from cost to net realizable value should
not
be made in the period in which the price decline occurs.
24. An error that overstates the ending inventory will also cause net income for the period to be overstated.
25. If an error understates the beginning inventory, net income will also be understated.
26. If the inventory reported on the statement of financial position is understated, then net income reported on the income statement is understated.
a27.Accounting for inventories under IFRS is very similar to accounting under GAAP.
a28.A major difference between IFRS and GAAP is that GAAP specifically prohibits use of the FIFO cost flow assumption.
29. Inventory turnover is calculated as cost of goods sold divided by ending inventory.
a30.If a company uses the FIFO cost assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.