1.The Blotto Company made the following two errors in counting ending inventory:

• Understated 12/31/12 inventory by $2,000
• Understated 12/31/13 inventory by $3,000

The combination of these two errors will cause:

Select one:

a. 12/31/13 Retained Earnings to be understated by $3,000

b. 2013 Cost of Goods Sold to be overstated by $3,000

c. 2014 Beginning Inventory to be overstated by $1,000

d. 2014 Cost of Goods Sold to be understated by $1,000

e. 2013 Net Income to be overstated by $1,000

2.During periods of falling prices and frequent purchases and sales, a perpetual inventory system would result in a different dollar amount of Cost of Goods Sold than a periodic inventory system under which of the following inventory cost flow methods?

Select one:

a. Neither FIFO nor LIFO

b. Both FIFO and LIFO

c. LIFO, but not FIFO

d. FIFO, but not LIFO