When Inventories Are Written Down Due to the Application of the Lower

question 13

Multiple Choice

When inventories are written down due to the application of the lower of cost or market (LCM) rule, the account that is usually increased is

• A) Accumulated Depreciation-Inventory
• B) Inventories
• C) Loss on Decline in Inventory Value
• D) Cost of Goods Sold

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Definitions:

Debit

The left side of an account.

Credit

An accounting entry that increases a liability or equity account, or decreases an asset or expense account, represented on the right side of the ledger.

Closing Entry Process

The accounting procedure used at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

Revenue Accounts

Accounts that track the income earned from the sale of goods and services, or the increase in equity resulting from the operations of an organization.