Write TRUE or FALSE for the following questions

1.Although optional, a reversing entry is usually made for adjusting entries that accrue expenses to be paid in the next accounting period.

2.In a period of falling prices, FIFO produces the lowest cost of goods sold and the highest gross profit.

3.Assets sold on or before the 15th are not considered owned for the month based on the nearest whole month convention.

4.In a period of rising prices LIFO produces the highest cost of goods sold and the lowest gross profit.

5.Under the direct method of reporting operating cash flows, a company deducts its operating cash outflows from its operating cash inflows to determine its net cash provided by (or used) in operating activities.

6.All long-term investments are listed on the balance sheet at fair value.

7.The use of inventory pools with dollar-value LIFO overcomes the issues associated with keeping numerous detailed records of individual quantities of each item.

8.The purpose of closing entries is to reduce the balance in the temporary (periodic) accounts to zero and to update the Retained Earnings account.

9.The convergence project between the IASB and GAAP was initiated in 2002 when the two boards entered into the Northward Agreement.

10.Compensated absences include vacation, holiday, sick, or other activities for which the company pays its employees.

11.Since the purpose of depreciation is to match the total cost of the asset with the benefits to be derived from the asset, the costs of repairs and maintenance associated with the asset should be considered when choosing a depreciation method.

12.The general journal has all journal entry transactions listed by account title.

13.Asset measurement methods that reflect historical values include fair value, present value, replacement cost, and net realizable value.

14.In order to prepare the financial statements, the ending balance in each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

15.The most common way in which to prepare the statement of cash flows is the indirect method, which is encouraged by FASB.