TRUE-FALSE STATEMENTS
1. Transactions that affect inventories on hand have an effect on both the statement of financial position and the income statement.
2. The more inventory a company has in stock, the greater the company's profit.
3. Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.
4. Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods.
5. Goods out on consignment should be included in the inventory of the consignor.
6. All inventories are reported as current assets on the statement of financial position.
7. One reason a company using a perpetual inventory system must make a physical count of goods is to determine the amount of inventory on hand as of the statement of financial position date.
8. IFRS allows companies to cost inventory using either the LIFO or the FIFO cost flow assumption.
9. The average cost method costs units using a weighted-average unit cost.
10. The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.