1. 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 by choosing which item to sell if the cost is different for identical items of inventory.
True False
2. The specific identification inventory method is not practical for companies that sell many low-priced, high turnover items.
True False
3. The last-in, first-out cost flow method assigns the cost of the items purchased last to ending inventory.
True False
4. Generally accepted accounting principles allow the cost flow pattern for merchandise inventory to differ from the physical flow of merchandise within the business.
True False
5. 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.
True False
6. A company's gross margin reported on the income statement is not affected by the inventory cost flow method it uses.
True False
7. Generally accepted accounting principles would not allow a company to use FIFO for part of its inventory and the weighted-average cost flow assumption for the rest of its inventory.
True False