13. The cost flow assumption selected by a company must correspond to the actual physical movement of the company’s merchandise. True False 14. A perpetual inventory system eliminates the need for periodically taking a physical inventory. True False 15. Because of the consistency principle inventory should never be written down below cost. True False 16. In a perpetual inventory system the flow of inventory cost is first through the balance sheet then through the income statement. True False 17. The principle of consistency prohibits a company from changing an inventory valuation method once one is selected. True False 18. In a periodic inventory system understating the amount of ending inventory will cause an understatement of gross profit in the current year. True False 19. In a periodic inventory system overstating the amount of ending inventory will cause an understatement of gross profit in the following year. True False 20. If the terms of a sale are F.O.B. shipping point the sale should not be recorded until the goods are delivered to the buyer. True False 21. Just-in-time inventory systems cannot be used in conjunction with LIFO. True False 22. Companies with perpetual inventories need not take physical inventory counts because inventory amounts are perpetually available. True False 23. The higher a company’s inventory turnover rate the higher its gross profit. True False 24. A clothing store would logically have a higher inventory turnover rate than would a doughnut shop. True False 25. Overstating the ending inventory will result in understating the cost of good sold and overstating profits. True False
