21.Inventory turnover is calculated as cost of goods sold divided by average inventory.
22.Inventory turnover under LIFO is greater than inventory turnover under FIFO when unit costs are increasing.
23.The average days to sell inventory decreases as inventory turnover increases.
24.An increase in inventory is subtracted from net income when determining cash flow from operating activities.
An increase in inventory means that sales of inventory are less than purchases.
25.An increase in accounts payable is added to net income when determining cash flows from operating activities.
An increase in accounts payable means that payments to suppliers are less than amounts purchased.
26.When there is a $3,000,000 decrease in inventory and a $2,000,000 decrease in accounts payable, cash flow from operating activities increases by $1,000,000.
27.The LIFO Reserve represents the excess of FIFO inventory costs over LIFO inventory costs.
28.In a period of increasing costs, the LIFO Reserve would be deducted from the ending inventory under LIFO costing to convert it to ending inventory under FIFO costing.
29.An understatement of ending inventory results in an overstatement of net income.
An understatement of ending inventory results in an overstatement of cost of goods sold and therefore an understatement of net income.
30.In the year of an overstatement of ending inventory, cost of goods sold will be understated and net income will be overstated.
An overstatement of ending inventory results in an understatement of cost of goods sold and therefore an overstatement of net income.
31.An overstatement of the 2015 ending inventory results in an understatement of net income during 2016.
An overstatement of 2015 ending inventory causes the 2016 beginning inventory to be overstated and 2016 cost of goods sold to be overstated, and, therefore, 2016 net income will be understated.
32.LIFO liquidation results when a company has a lower level of inventory at the end of the year than it had at the beginning of the year.
33.An overstatement of the 2015 ending inventory results in an overstatement of stockholders' equity as of the end of 2016.
34.An overstatement of the 2015 ending inventory results in an overstatement of stockholders' equity as of the end of 2015.
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