True / False Questions
93. One of the disadvantages of the specific identification inventory cost flow method is that it can allow managers of a business to manipulate the amount of income the business reports.
94. The specific identification inventory method is not practical for companies that sell many low-priced, high turnover items.
95. The last-in, first-out cost flow method assigns the cost of the items purchased last to ending inventory.
96. Generally accepted accounting principles allow the cost flow pattern for merchandise inventory to differ from the physical flow of merchandise within the business.
97. In most businesses, the physical flow of goods occurs on a FIFO basis, but a different cost flow method is allowed under generally accepted accounting principles.
98. A company's gross margin reported on the income statement is not affected by the inventory cost flow method it uses.
99. During a period of rising prices the FIFO cost flow method will result in higher total assets than LIFO.
100. During a period of rising prices, a company's cost of goods sold would be higher using the LIFO cost flow method than with FIFO.
101. During a period of rising prices, a company would report a higher gross margin using the LIFO cost flow method than with FIFO.
102. A company uses a cost flow method (such as LIFO or FIFO) to allocate product costs between cost of goods sold and beginning inventory.