Which of the Following Statements Is Correct Regarding International Financing

question 12

Multiple Choice

Which of the following statements is correct regarding International Financing Reporting Standards (IFRS) and U.S. GAAP with regard to inventory?

• A) LIFO (last-in, first-out) is permitted under IFRS but not under U.S. GAAP.
• B) When applying lower-of-cost-or-market, U.S. GAPP defines market as net realizable value.
• C) IFRS permits valuing inventories at fair value, similar to the accounting for property, plant, and equipment.
• D) Under U.S. GAPP, if inventory is written down under lower-of-cost-or-market, it may not be written back up to its original cost in a subsequent period.

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Definitions:

Cost of Goods Sold

The expenses directly related to the manufacturing of products sold by a business, including the costs associated with materials and labor.

Departmental Accounting

An accounting method that tracks the income, expenses, and profitability of individual departments within a company.

Direct Costs

Costs that can be directly traced to a specific cost object, such as a product, service, or department.

Indirect Costs

Costs that cannot be directly attributed to the production of goods or services, such as overhead and administrative expenses.