1. FIFO tends to increase cost of goods sold when:

A. costs are constant

B. costs are declining

C. costs are increasing

D. FIFO will always yield the lowest possible cost of goods sold

2. Which of the following would be included in the Inventory account on a merchandising company's balance sheet?

A. shipping costs from the manufacturer to the merchandising company

B. sales commissions

C. delivery costs

D. advertising costs

3. If ending inventory on December 31, 2016, is overstated, then:

A. gross margin for the year ended December 31, 2016, will be understated

B. gross margin for the year ended December 31, 2017, will be understated

C. cost of goods sold for the year ended December 31, 2017, will be understated

D. cost of goods sold for the year ended December 31, 2016, will be overstated