If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income? average cost LIFO FIFO weighted average If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the consignee retailer manufacturer shipper During the taking of its physical inventory on December 31, 2010, Barry's Bike Shop incorrectly counted its inventory as $270,000 instead of the correct amount of $190,000. The effect on the balance sheet and income statement would be as follows: assets overstated by $80,000;retained earnings understated by $80,000; net income statement understated by $80,000. assets overstated by $80,000;retained earnings understated by $80,000; no effect on the income statement. assets and retained earnings overstated by $80,000; net income overstated by $80,000;. assets and retained earnings overstated by $80,000; net income understated by $80,000. When the perpetual inventory system is used, the inventory sold is debited to supplies expense cost of merchandise sold merchandise inventory sales Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to Merchandise Inventory Purchases Accounts Payable Cost of Merchandise Purchased Which of the following inventory cost methods is appropriate for a business who has inventory with a relatively small number of unique items and a high cost per item? FIFO LIFO average specific identification