1. At the end of the year, Blue Sales Company omitted $36,400 of inventory from their year-end inventory count. As a result,

1. Net income for the year will be understated and cost of goods sold will be correct.
2. Net income for the year will be correct and cost of goods sold will be overstated.
3. Net income for the year will be understated cost of goods sold will be overstated.
4. Net income for the year will be overstated cost of goods sold will be overstated.

2. During its first year of operation, CD warehouses inventory costs were steadily rising. Which method( FIFO or LIFO) gives the lowest ending inventory valuation on the balance sheet and which methods gives the lowest net income?

A. Ending Inventory: LIFO /Net Income: FIFO

B. Ending Inventory: LIFO /Net Income: LIFO

C. Ending Inventory: FIFO /Net Income: FIFO

D. Ending Inventory: FIFO/Net Income: LIFO