Final answer:
It is false that a company includes in ending inventory the cost of merchandise sold that it anticipates will be returned. Such items are recognized as part of an allowance for sales returns when the return occurs, not as part of inventory.
Step-by-step explanation:
The statement that a company includes in ending inventory the cost of merchandise sold that it anticipates will be returned is false. Generally, the accounting principle that is applied is the recognition of returns when they actually occur. Merchandise that has been sold and is expected to be returned is typically accounted for as a sales return and allowance when the return actually happens, and not as part of ending inventory.
Ending inventory should only include items that are physically present and owned by the company at the end of the accounting period. Anticipated returns can be accounted for through a separate allowance for sales returns, which is a contra-revenue account that appears on the income statement.