The Adjusting Entry to Recognize the Write Down of Inventory

question 62

Multiple Choice

The adjusting entry to recognize the write down of inventory based on the lower-of-cost-or-market rule will

• A)decrease the cash flow from operating activities.
• B)decrease the amount of liabilities.
• C)increase the amount of assets.
• D)increase the amount of expenses.

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Definitions:

Price Ceilings

A government-imposed limit on how high a price can be charged for a product or service.

Quantity Traded

The total number of units of goods or services exchanged in a market during a given period.

Shortages

Conditions where the demand for a good or service exceeds the available supply, often leading to increased prices.

Minimum Wage Legislation

Laws that set the lowest hourly, daily, or monthly remuneration that employers can legally pay their workers.