Indicate whether the statement is true or false If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed. A perpetual inventory system is an effective means of control over inventory. The selection of an inventory costing method has no significant impact on the financial statements. When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold The specific identification inventory method should be used when the inventory consists of identical, low cost units that are purchased and sold frequently. Select which inventory system is indicated by each sentence. Perpetual Periodic This system can be costly and time consuming if not computerized Average cost is rarely used with this system Under this system only revenue is recorded when sales are made When using this system a physical inventory is necessary to determine Cost of Goods Sold. Match the following cost flow assumption to their inventory costing method: Average Cost First-in, First-exit (FIFO) Last-in, Last-out (LIFO) Specific Identification Cost flow is in the reverse order in which the cost were incurred Cost flow matches the unit sold to the unit purchased Cost flow is in the order in which the costs were incurred Match the following sentences to the inventory cost flow method they describe FIFO LIFO Average Cost Ranch used with a perpetual inventory system. Widely used for tax purposes Produces the highest gross profit when costs are decreasing Produces the highest ending inventory when costs are increasing. Does not follow the physical flow of goods in most cases