Because of its size, cost of goods sold normally has a significant impact on the amount of net income that is reported on the income statement. Since the reported balance in the inventory account has a direct effect on the amount of cost of goods sold, inventory manipulation is a target for unscrupulous managers seeking to control the amount of reported earnings. These statements are:.

a. true

b. false

B. False

Explanation:

some companies will change the inventory valuation on purpose to avoid paying taxes on inventory items. Companies will categorize some inventory items as expenses because company expenses are not always subject to taxation, meaning that the amount of taxed product is limited

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