If Net Realizable Value of the Inventory Is Lower Than

question 101

True/False

If net realizable value of the inventory is lower than its cost, the total assets on the statement of financial position and profit on the income statement will be reduced.

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Definitions:

General Adaptation Syndrome

A model describing the body's short-term and long-term reactions to stress, consisting of three stages: alarm, resistance, and exhaustion.

Resistance Stage

The second stage of the general adaptation syndrome (GAS), in which the body adapts to a stressor.

Exhaustion Stage

The final stage of the general adaptation syndrome (GAS), in which the body’s ability to resist a stressor has been depleted.

Alarm Stage

The initial phase of the stress response, where the body recognizes a threat and prepares to face or flee from it, activating the fight-or-flight response.