Generally Accepted Accounting Principles (GAAP)require That Inventory Be Recorded at

question 48

Multiple Choice

Generally accepted accounting principles (GAAP) require that inventory be recorded at

• A) the lower of cost or fair market value.
• B) the lower of cost or net realizable value.
• C) the higher of cost or net realizable value less a normal profit (floor).
• D) none of the above.

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Definitions:

Disposable Income

Money that households can allocate towards savings and spending after income tax charges.

C + I

An economic term that represents the sum of consumer spending (C) and investment spending (I); key components of the Gross Domestic Product (GDP) formula.

Investment

The allocation of resources, such as capital or time, in the hope of generating future profits or benefits.

Capacity Utilization Rate

The percentage of a firm's total production capacity that is actually being used in production.