Answer the following statements true (T) or false (F)
1) A company discovers that its cost of goods sold is understated by an insignificant amount. It does not need to correct the error because of the conservatism principle.
2) The accounting principles followed for a $5,000 cost in a small company must be the same as the accounting principles followed for a $5,000 cost in a large company.
3) Properly recording inventory when sold and removing the units sold from the inventory count will prevent a company from running out of inventory.
4) Maintaining good controls over merchandise inventory ensures that inventory purchases and sales are properly authorized and accounted for by the accounting system.
5) Ending inventory is calculated by multiplying the number of units on hand by the unit cost.
1. FALSE
2. FALSE
3. TRUE
4. TRUE
5. TRUE
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