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1. If the market value of a company's inventory increases, the company should record a gain. 2. A company should include costs of transporting an item to its store when determining the cost of the item. 3. A company that uses a perpetual inventory system should still perform a physical inventory count. In a perpetual system, but not a periodic system, cost of goods sold is determined and recorded at the time of sale. 5. If inventory is shipped FOB shipping point, the buyer takes title as soon as the inventory leaves the seller's warehouse. 6. 12 Companies infrequently take advantage of purchase discounts because they amount to so little savings. 7. Companies only follow the "lower-of-cost-or-market" guideline if they use a periodic inventory system. 8. Using the LIFO cost assumption will always result in a lower net income than using the FIFO cost assumption. 9. LIFO tends to provide a better match of costs and expenses than FIFO and averaging. 10. Companies can use LIFO for tax purposes and FIFO for financial reporting 11. It is impossible for decision makers to compare a company who uses LIFO with one who uses FIFO. 12. A jewelry store or boat dealership would normally be able to use the specific identification method. The underlying concept of FIFO is that the earliest inventory purchased would be sold first 13

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