If the Market Value of Goods in Inventory Is $26,000

question 6

Multiple Choice

If the market value of goods in inventory is $26,000 below its cost,the company should:

• A)do nothing,because assets are reported at their original purchase price.
• B)credit Inventory for $26,000.
• C)debit Inventory for $26,000.
• D)use the weighted average cost method since that method provides a more accurate indicator of current value.

---

Definitions:

Debt-to-equity Ratio

A ratio illustrating the proportional use of shareholder equity and debt in the acquisition of a company's assets.

Receivable Turnover

A financial metric indicating the efficiency of a company in collecting its accounts receivable or the effectiveness of its credit policy.

Inventory Turnover

A metric representing the frequency at which a business's stock is sold and restocked within a given timeframe, reflecting how effectively inventory is handled.

Current Ratio

An indicator of how well a company can handle its immediate debts, assessing its ability to cover obligations maturing in one year or less.