7. Does the FIFO or LIFO inventory costing method valuation purposes? Which method provides a more appro- 13. How do decision makers use the inventory tu and priate valuation for income statement purposes? Provide age of inventory when analyzing a company's your rationale for each answer. (LO 5.2) data? (LO 5.6) Required: (a) Which its Dece (b) Explain the item (d) 16. Perpetual Iny Several transa Com EXERCISES 14. True or False (ANI LOS) Following are a series of statements regarding topics dis- cussed in this chapter Required: Indicate whether each statement is true (T) or false (F). (a) Companies may value inventory at current replace ment cost if the historical cost of inventory is lower than current replacement cost. (b) When goods are shipped FOB destination, the seller is responsible for paying the transportation charges. (c) An error in a company's ending inventory balance automatically causes the following period's beginning inventory balance to be misstated. Under the LIFO method of inventory, the the most recently acquired goods are sent to of Goods Sold first, whereas the costs of the di goods remain in inventory. (e) Merchandising companies want to maintain a b an inventory turnover ratio as possible. ( If a company uses the FIFO method of invem costing for federal tax purposes, it must also FIFO for financial reporting purposes. (g) In an inflationary economic environment, to FIFO inventory costing method typically yield higher net income than the LIFO method whe these methods are applied to the same fini data