When the Cost-Of-Goods-Sold Method Is Used to Record Inventory at Net

question 72

Multiple Choice

When the cost-of-goods-sold method is used to record inventory at net realizable value

• A)there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.
• B)a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline.
• C)only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements.
• D)the net realizable value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold.

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Definitions:

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A setting or condition where a system or device is off or inactive until activated by a specific command or action.

Spring-loaded

A mechanism or device that uses a spring to return to its original position after displacement.

Allison WT

refers to a series of automatic transmissions designed and produced by Allison Transmission for vehicles, especially trucks and buses, known for their reliability and efficiency.

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A gearbox that alters the direction of drive, typically used in heavy-duty vehicles to transmit power from the engine to the axles.