Answer the following statements true (T) or false (F)
1) An overstatement of ending merchandise inventory in the current period results in an overstatement of cost of goods sold in the current period.
2) An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.
3) An inventory error cancels out after two periods.
4) Businesses strive to sell merchandise inventory quickly because the merchandise inventory generates no profit until it is sold.
5) Two ratios that help businesses monitor their inventory levels are days' sales in inventory and the inventory level ratio.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
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