Which of the following statements regarding comparisons made in managing inventory is not true?
A) In making comparisons of financial statements, it is desirable to compare data calculated using the same inventory costing methods.
B) The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used, which causes problems for financial statements users.
C) Because of the use of different costing methods, comparisons of different companies are more difficult.
D) An increase in inventory account balances always indicates a less favorable situation.

Question

Quizplus · Accepted Answer

An increase in inventory account balances may indicate a less favorable situation, but this is not always the case. It depends on the context of the increase (e.g. seasonal fluctuations, planned inventory build-up). Therefore, this statement is not true.

Which of the Following Statements Regarding Comparisons Made in Managing