Topic: Interim Financial ReportingInventories

1) Which of the following statements is false regarding the interim financial reporting of inventories?

a. Accounting standards permits companies to use estimated gross profit rates to determine the cost of goods sold during interim periods.

b. LIFO liquidation computation should be done with respect to the entire year, not just the current reporting period.

c. Reduction for lower of cost or market need not be recognized if we expect market prices for the affected inventory to recover by year-end.

d. Standard cost variance analysis must be performed and recognized with respect to the interim period only.

Topic: Inventory

2) Which of the following statements best describes fund accounting for inventories?

a. Inventories on hand at the end of the accounting period are not reflected on the balance sheet.

b. Inventories used during the period are reflected as an expense in the Statement of Revenues, Expenditures, and Changes in Fund Balances.

c. There is generally no recognition in the fund accounts of any remaining balance of inventories at the end of the accounting period.

d. None of the above