When the Cost-Of-Goods-Sold Method Is Used to Record Inventory at Market

question 106

Multiple Choice

When the cost-of-goods-sold method is used to record inventory at market

• A) there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.
• B) a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline.
• C) only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements.
• D) the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold.