When the Lower of Cost or Market Rule Requires an Inventory

question 19

Multiple Choice

When the lower of cost or market rule requires an inventory adjustment,the:

• A) adjustment usually, but not always, reduces the book value of inventory.
• B) write-down is usually reported as a part of cost of goods sold.
• C) inventory adjustment is recorded in a contra-account called Inventory Allowances.
• D) write-down does not affect any of the financial statements.

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