When Applying the LCM Using the Direct Method the Following

question 63

Multiple Choice

When applying the LCM using the direct method the following is true:

• A)The inventory account remains at its original value
• B)A contra account to inventory is used
• C)COGS rises when ending inventory is reduced to market value
• D)LCM can only be applied to individual items.

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Definitions:

Consumer

This defines an individual who purchases goods and services for personal use, driving demand in the market.

Price

The monetary charge expected, imposed, or given in settlement for something.

Price Takers

Market participants who accept the prevailing market price without having the influence to alter it.

Output Level

The total quantity of goods or services produced by a business or economy in a given period.