If Year-End Inventory Is Reduced from Cost to a Lower

question 3

Multiple Choice

If year-end inventory is reduced from cost to a lower net realizable value, which of the following accurately depicts the results?

• A) The capital account balance is increased and beginning inventory of the next period is reduced by the same amount.
• B) Cost of goods sold is increased and beginning inventory of the next period is decreased by the same amount.
• C) Cost of goods sold is reduced and beginning inventory of the next period is reduced by the same amount.
• D) Year-end inventory is reduced and cost of goods sold is reduced by the same amount.

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Definitions:

Communicating

The process of transferring information, ideas, thoughts, and feelings between people through speech, writing, signals, or behavior.

Bureaucratic Approach

A method of organization emphasizing a structured hierarchy, strict rules, and a clear division of responsibilities to achieve efficiency.

Scientific Approach

A methodical process used for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge, based on empirical or measurable evidence.

Theory X

A management theory assuming employees are inherently lazy and will avoid work if they can, necessitating control and coercion by managers.