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:

Utilitarian Argument

A principle in ethics and economics that advocates for actions that maximize happiness or well-being for the largest number of people.

Minimum Wage Law

Legislation establishing the lowest hourly rate that employers can legally pay their employees.

Income Distribution

The way in which a country's total economic output is divided among its population, or the share of national income earned by each quintile or group of the population.

Bottom Fifth

A term often used in income distribution to refer to the lowest 20% of income earners in a given population.