ACC 304 All Assignments ACC 304 All Assignments | Page 68

6. If both purchases and ending inventory are overstated by the
same amount, net income is not affected.
7. Freight charges on goods purchased are considered a period cost
and therefore are not part of the cost of the inventory.
8. Purchase Discounts Lost is a financial expense and is reported in
the “other expenses and losses” section of the income statement.
9. The cost flow assumption adopted must be consistent with the
physical movement of the goods.
10. In all cases when FIFO is used, the cost of goods sold would be
the same whether a perpetual or periodic system is used.