An Adjustment to Ending Inventory Under the Lower of Cost

question 98

Multiple Choice

An adjustment to ending inventory under the lower of cost or market (LCM) rule would be least likely to be recorded by a company that sells:

• A)a household staple like laundry detergent.
• B)a fad product like bathing suits.
• C)seasonal items like snow blowers.
• D)high-tech goods like Personal Digital Assistants.

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Definitions:

Stockbrokers

Professionals who buy and sell stocks and other securities on behalf of clients, usually for a fee or commission.

Corporate Debtors

Businesses that owe money to creditors and are responsible for repaying debt.

Reaffirmation Agreement

A legal document filed in bankruptcy proceedings where the debtor agrees to repay a portion or all of an outstanding debt.

Bankruptcy

A legal process allowing individuals or businesses that cannot meet their financial obligations to eliminate or repay their debts under the protection of the law.