Answer the following statements true (T) or false (F)
1) The Cost of Goods Sold account is credited to write down the inventory as required by the lower-of-cost-or-market rule.
2) The Merchandise Inventory account is debited to write down the inventory as required by the lower-of-cost-or-market rule.
3) Companies often disclose that the LCM rule is followed in notes to their financial statements.
4) An overstatement of ending merchandise inventory in the current period results in an understatement of net income in the current period.
5) An overstatement of ending merchandise inventory in the current period results in an overstatement of net income in the current period.
1. FALSE
2. FALSE
3. TRUE
4. FALSE
5. TRUE
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