A Company Discovered That Inventory That Cost $2 000 and Normally

question 13

Multiple Choice

A company discovered that inventory that cost $2 000 and normally sells for $2 400 has become obsolete and will be scrapped next month. The effect of the adjusting journal entry is to:

• A) decrease profit by $2 000 and decrease total assets by $2 000.
• B) decrease profit by $2 400 and decrease total assets by $2 000.
• C) decrease profit by $2 400 and decrease total assets by $2 400.
• D) decrease profit by $2 000 and not affect total assets.

---

Definitions:

Willing Lenders

Individuals or institutions that are prepared to provide loans or financing to others, expecting to earn interest or receive financial returns.

Earmarks

Narrow, specially designated spending authorizations placed in broad legislation by senators and representatives for the purpose of providing benefits to firms and organizations within their constituencies. Earmarked projects are exempt from competitive bidding and normal evaluation procedures.

Authorized Expenditures

Expenditures that are officially approved or sanctioned by an authoritative body or individual, often within an organizational or governmental context.

Narrow Specifically

Focusing or specializing in a very specific or narrow area or topic.