Assume That There Is a Decline in Inventory Value in One

question 52

Multiple Choice

Assume that there is a decline in inventory value in one period, then there is a reversal of value to the original or higher value and a later period. Which of the following statements about recognition of the loss is true?

• A) The decline in inventory value and related loss should be recognized in the first period and reversed in the second period in all situations.
• B) The decline in inventory value and related loss should be recognized in the first period and reversed in the second period but only if the second period is within the same fiscal year.
• C) The decline in inventory value and related loss should be recognized in the first period and reversed in the second period but only if the second period is within a different fiscal year.
• D) The decline in inventory value and related loss should never be recognized.

Grasp the concept of diminishing returns and its effects on cost and production.

Understand the role of scale economies in long-run cost behavior.

Understand the impact of first impressions and biases on the hiring process.

Recognize the steps involved in designing and evaluating training and development programs.

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Definitions:

Current Liabilities

Obligations or debts a company is expected to pay within one year, often including accounts payable, short-term loans, and other similar liabilities.

Liquidity

A measure of how quickly and easily an asset or security can be converted into cash without significantly affecting its market price.

Profitability

A measure of the efficiency and effectiveness with which a company or business generates profit from its operations.

Non-Interest-Bearing Note

A promissory note that does not accrue interest over time, meaning the borrower only repays the principal amount.