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The following entry is taken from the journal of a merchandising company:
Cost of Goods Sold 6,000
Merchandise Inventory 6,000
Problem 1: What is the effect of this entry on the company's financial statements?
A.) Asset and stockholders's equity increase
B.) Asset and liabilities increase
C.) Assets and stockholders' equity decrease
D.) Assets decrease and stockholders' equity increases.
Problem 2: At a time of declining prices, which inventory cost flow method will result in the highestending inventory?
A.) Weighted-average
B.) FIFO
C.) LIFO
D.) Either weighted-average or FIFO
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