3) Select the answer below that would justify the use of a cost flow assumption.

A) the matching principle.

B) materiality and conservatism.

C) the historical cost principle.

D) the cost benefit constraint.

E) lower of cost or market.

4) How many of the below statements are true?

(i) When the buyer of inventory is legally responsible for freight the freight cost should be expensed in the period incurred.

(ii) Under the gross method learned in class, trade discounts are recorded at the time of the cash payment.

(iii) If the goods are shipped FOB shipping point the seller owns the asset while it is in transit and therefore bears the risk of loss during this time.

(iv) It is acceptable under the U.S. tax system for a company to use LIFO for tax reporting while using FIFO for U.S. GAAP.