TRUE OR FALSE?

1. When a company makes use of a periodic inventory system, the purchases account will be debited when purchases take place and will be credited at financial year-end.

2. Under the LIFO cost flow method, the balance sheet (inventory balance) is more reflective of current cost compared to the income statement (COGS).

3. The LIFO reserve is the ending balance in the account "allowance to reduce inventory to LIFO" whereas the LIFO effect is the end of period adjustment to arrive at that ending balance.

4. When a company uses the dollar value LIFO method and current inventory converted to base year prices is lower than prior year inventory at base year prices, dollars will be subtracted from the most recent inventory layer first.