Question 3 (15 marks)

Provide answers to the following questions:

Explain two specific ways in which the balance sheet of a company differs from its incomestatement. (3 marks)

What costs should be included in the cost of an item of inventory? (3 marks)

Why the income statement of a firm is described as a financial statement that contains temporaryaccounts. (3 marks)

The difference between FIFO and LIFO methods in determining the monetary value ofinventory. (3 marks)

Explain factors a firm should consider in selecting a particular inventory valuation method such asFIFO or LIFO. (3 marks)