Question

TRUE OR FALSE ACCOUNTING

1. When using the LIFO inventory costing method, the most recent costs are assigned to the cost of goods sold.
2. Specific identification should be used when building custom race cars.
3. The amounts debited to the inventory account depend on the inventory costing method used.
4. Companies use the LIFO inventory method to reduce income taxes.
5. During periods of increasing costs, the use of LIFO, rather than FIFO, will result in a greater amount of COGS being reported.
6. GAAP requires companies with receivables to use the allowance method.
7. When the allowance method for bad debts is used, net income is not reduced when a specific customer’s receivable is written off.
8. Having the oil changed in a company truck should be capitalized.
9. Replacing an engine in a plane would be a capital expenditure.
10. A tangible asset has a physical existence.

Answer 1

1. True

2. True

3. False

4. True

5. True

6. True

7. True

8. False

9. True

10. True

Step-by-step explanation:

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Answer 2

1. True
2. True
3. False
4. True
5. True
6. True
7. True
8. False
9. True
10. True