Indicate Whether Each of the Following Statements Related to Inventory

question 123

Short Answer

Indicate whether each of the following statements related to inventory is true or false.
_____ a)The higher a company's inventory turnover ratio,the higher its cost of financing inventory.
_____ b)The selling price a company charges for its goods probably will not be affected by the inventory cost flow method it uses.
_____ c)Other things being equal,if prices are rising,a company that uses the LIFO inventory method will have a higher amount of total assets than if it had used FIFO.
_____ d)A company that plans to offer a higher level of customer service than its competitors probably will have a higher gross margin percentage than its competitors.
_____ e)The lower of cost or market rule may reduce a company's net income,but it will never increase net income.

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Definitions:

Dual-Process Theory

The proposal that judgment involves two types of thinking: a fast, efficient, but sometimes faulty set of strategies, and a slower, more laborious, but less risky set of strategies.

System II

Often refers to a mode of thinking that is slower, more deliberative, and more logical than fast, automatic, intuitive responses (System I thinking).

Quantifiable

Capable of being measured or expressed as a quantity, enabling numerical assessment or comparison.

System II

A term often used in psychology to describe the deliberative, analytical form of cognition that requires concentration and is slower than intuitive thinking.