2 The LIFO method of inventory costing better matches current costs with revenues. True or False True False 3 An understatement of the ending inventory balance will overstate cost of goods sold and understate net income. True or False True False An.overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet. True or False True False Merchandise inventory includes: Multiple Choice All goods that a company owns and holds for sale. All goods in transit. O All goods on consignment. Only damaged goods. Only non-damaged goods. 6 Goods in transit are included in a purchaser's inventory: Multiple Choice At any time during transit. O When the goods are shipped FOB shipping point. When the supplier is responsible for freight charges. If the goods are shipped FOB destination. After the half-way point between the buyer and seller. 7 The inventory costing method that results in the lowest taxable income in a period of rising costs is: Multiple Choice LIFO method. FIFO method. Weighted-average cost method. Specific identification method. Gross profit method. 00 The understatement of the ending inventory balance causes: Multiple Choice Cost of goods sold to be overstated and net income to be understated. Cost of goods sold to be overstated and net income to be overstated. Cost of goods sold to be understated and net income to be understated. Cost of goods sold to be understated and net income to be overstated. Cost of goods sold to be overstated and net income to he correct