The Factor That Could Cause the Net Realisable Value of an Item

question 30

Multiple Choice

The factor that could cause the net realisable value of an item of inventory to be lower than its cost is:

• A) the goods were originally purchased at too low a price.
• B) a rise in the market price of the item.
• C) the inventory item has become obsolete.
• D) all of the above.

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Definitions:

Variable Costs

Costs that change in proportion to the level of goods or services produced by a business, such as raw materials and labor expenses.

Resource Price

The cost of inputs used in the production of goods or services, such as raw materials, labor, and capital.

Profit-Maximizing

An approach or strategy aimed at achieving the highest possible profit from business operations.