1. The closing entries necessary under the perpetual and periodic inventory procedures do not differ because all expenses and revenues must be closed.

A. True

B. False

2. The gross margin method uses the gross margin rate of the current period in estimating the cost of inventory.

A. True

B. False

3. On January 1, 2007, Nichols Companys inventory of Item X consisted of 2,000 units that cost $8 each. During 2007 the company purchased 5,000 units of Item X at $10, each, and it sold 4,500 units. Periodic inventory procedure is used. Cost of ending inventory using weighted-average cost is:

A. $21,000.

B. $25,500.

C. $23,572.

D. $16,000.

E. None of these.

4. In a period of falling prices, FIFO will result in a higher net income figure than that resulting from LIFO.

A. True

B. False

5. An overstatement of the beginning inventory will result in an overstatement of the net income for the period.

A. True

B. False