11 Berck True Industries reported net sales totaling $3,200,000 during the year. The company's gross profit rate was determined to be 41%. Which statement is true? a. The company generated $1,312,000 of net income during the year. b. The company generated 41 cents of net income out of each dollar of assets owned by the company. C. The company generated 41 cents out of every sales dollar that is available to cover its operating expenses and contribute to profit. d. The inventory cost is 41% of the sales price of the inventory items. 12. Which statement is true regarding the lower-of-cost-or-market (LCM) method of inventory? a. LCM is an example of the revenue recognition principle. b. LCM is departure from the cost basis of accounting. C. Market is defined as current selling price. d. Inventory is adjusted to market value each accounting period. - 13. Advan Company's ending inventory is overstated by $2,000. What is the effect of this error on the current year's cost of goods sold and net income, respectively? a. Overstated and understated b. Overstated and overstated c. Understated and overstated d. Understated and understated What is a LIFO reserve? a. The tax savings resulting when LIFO is used during periods of rising prices b. The difference in net income when a company uses LIFO as compared to FIFO C. The difference between the inventory value and cost of goods sold when a company uses LIFO d. The difference between the inventory value under LIFO and FIFO A company uses LIFO to cost its inventory. Which statement is true? a. The company must sell its newer inventory items before its older items. b. The company will pay less income taxes in periods of rising prices compared to using FIFO. C. The cost of the company's older inventory items are transferred to cost of goods sold prior to the cost of the newly acquired items. d. One way to think about the ending inventory under LIFO is the LISH assumption