An incorrect valuation of the ending inventory affects the Balance Sheet but not the Income Statement.

True or False

The Lower of cost and net realizable value (LC&NRV) rule sometimes causes the book value of inventory to be lowered below cost but will never cause the book value of inventory to be raised above cost.

True or False

A company should always keep extra inventory on hand; it could be needed if demand increases and it has to be bought sooner or later so it adds nothing to cost.

True or False

To determine the effects of inventory errors on the financial statements in both the current year and the following year all you need is the cost of goods sold equation

True or False

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