One Hundred Units of Inventory on Hand at the End

question 110

Multiple Choice

One hundred units of inventory on hand at the end of the year are recorded at their cost of $10 each using LIFO. Current net realisable value is $8.00. How would the Cost of sales be affected by the adjusting entry needed under lower- of- cost- and- net- realisable- value?

• A)Cost of sales would go up by $200.
• B)Cost of sales would not be affected.
• C)Cost of sales would go down by $200.
• D)Cost of sales would go down by $80.

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Definitions:

Ocean-Continent Convergence

A type of plate boundary where a continental plate and oceanic plate collide, often resulting in volcanic activity and mountain building.

Fold and Thrust Belt

A series of mountainous folds and thrust faults created by the compression of the earth's crust.

Foreland Basin

A structural basin that forms adjacent to mountain ranges, resulting from the earth's crust flexing downward due to the weight of overlying mountains.

Normal Faults

Faults where the hanging wall moves downward relative to the footwall, typically caused by extensional forces.