If a Unit of Inventory Has Declined in Value Below

question 147

Multiple Choice

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

• A) net realizable value.
• B) original cost.
• C) market value.
• D) net realizable value less a normal profit margin.

Calculate gross profit under different inventory costing methods.

Analyze the impact of price changes (increasing or decreasing) on inventory valuation and profitability.

Understand and apply the concept of net realizable value for damaged goods.

Recognize the relationship between inventory management decisions and income taxes.

---

Definitions:

Binge Drinking

The consumption of an excessive amount of alcohol in a short period of time, often leading to acute intoxication.

Drinks

Refers broadly to any liquid that is consumed including water, alcohol, sodas, and juices.

Child Abuse

The physical, emotional, sexual, or neglectful maltreatment of a child by a caretaker.

Neglect

The failure to provide adequate care, attention, or support to someone or something, resulting in harm or deterioration.