TRUE/FALSE
1.Revenues are reported on the income statement net of discounts and of expected returns.
2.For most firms, revenue is recognized at the point of cash collection.
3.Firms should recognize the expense related to uncollectible accounts when accounts are written off.
4.Raw materials inventory includes the costs of component parts that become part of the product being manufactured.
5.FIFO always results in the oldest inventory costs being reported on the income statement and the most recent inventory costs being reported on the balance sheet.
6.When prices are rising, the cost of inventory generally will be lower when reported on the balance sheet under the LIFO method than would have been reported under the FIFO method.
7.In a period of rising inventory costs, the LIFO inventory method results in the largest dollar amount of ending inventory being reported on the balance sheet.
8.If a company holds its inventory levels constant but experiences declining inventory costs per unit, LIFO produces a lower net income and lower taxes than does FIFO.
9.The last-in-first-out inventory measurement method would have the most recent costs in cost of goods sold.
10.Income tax expense is lowest if FIFO is used during periods of increasing prices.
11.Generally accepted accounting principles require firms to value inventories at lower-of-cost-or-market.
12.A company that uses LIFO for taxes also must use LIFO on its income statement.
13.A perpetual inventory system involves determining cost of goods sold at the end of the fiscal period.
14.Extraordinary items are reported as a separate item on the income statement, net of income taxes.