Inventory Turnover

True or False

1. ____ Using the LIFO cost assumption will always result in a lower net income than using the

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FIFO cost assumption.

2. ____ The United States is the only country that allows LIFO.

3. ____ LIFO tends to provide a better match of costs and expenses than FIFO and averaging.

4. ____ Companies can use LIFO for tax purposes and FIFO for financial reporting.

5. ____ The larger the inventory turnover, the better, in most cases.

6. ____ It is impossible for decision makers to compare a company who uses LIFO with one who uses FIFO.

7. ____ A jewelry store or boat dealership would normally be able to use the specific identification method.

8. ____ The underlying concept of FIFO is that the earliest inventory purchased would be sold first.

9. ____ Gross profit percentage can help users determine how long it takes companies to sell inventory after they purchase it.

10. ____ LIFO liquidation may artificially inflate net income.