71) Inventory turnover is calculated by dividing average inventory by cost of goods sold.
72) The gross margin method is often used for estimating inventory destroyed by a disaster such as a fire.
73) The gross profit method may aid in detecting large ending inventory errors.
74) The gross profit method is also referred to as the general margin method.
75) Inventory errors counter balance in two consecutive periods.
76) An understatement in ending inventory results in an overstatement of gross profit.
77) Inventory errors can be ignored because they counter balance fix themselves.
78) Overstating ending inventory in the current period will understate the following year's net income.
79) An error in the valuation of beginning inventory in the current period will affect the following year's net income.
80) If a company makes an error when counting ending inventory in 2010, the effect of the error will cancel out at the end of 2011.