Which One of the Following Statements Is True with Regard

question 77

Multiple Choice

Which one of the following statements is true with regard to the lower of cost or market rule?

• A)If the direct method is used in applying the lower of cost or market rule, the loss or loss recovery due to market valuation changes is included in cost of goods sold.
• B)The lower of cost or market rule must be applied on an individual item basis for financial accounting purposes.
• C)With the application of the lower of cost or market rule using the direct method, the account, Allowance to Reduce Inventory to Market, is reported on the balance sheet as a contra asset.
• D)The lower of cost or market rule is primarily an application of the going concern assumption.

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Definitions:

Mesoderm

The middle layer of an embryo in early development, giving rise to the musculoskeletal, vascular, and urogenital systems.

Trophoblast

The outer layer of cells surrounding a blastocyst in early pregnancy, which provides nutrients to the embryo and develops into part of the placenta.

Embryonic Period

A stage of prenatal development that takes place from fertilization until about the eighth week, during which the major organs and structures of the organism begin to develop.

Implantation

The process by which a fertilized egg attaches itself to the lining of the uterus to begin pregnancy.