True or False: Losses on reduction to LCM may be charged to either cost of goods sold or to a current loss account without distorting

True or False: Losses on reduction to LCM may be charged to either cost of goods sold or to a current loss account without distorting financial statement ratios.

Answer: FALSE

True or False: The purpose of ceilings and floors in LCM is to prevent profit distortion.

Answer: TRUE

True or False: The primary motivation behind LCM is consistency.

Answer: FALSE

True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.

True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.

Answer: TRUE

True or False: Inventory written down due to LCM may be written back up if market values go back up.

Answer: FALSE

Transfers between categories

a. result in companies omitting recognition of fair value in the year of the transfer.
b. are accounted for at fair value for all transfers.
c. are considered unrealized and unrecognized if transferred out of held-to-maturity into trading.
d. will always result in an impact on net income.


Answer: are accounted for at fair value for all transfers