The Primary Basis of Accounting for Inventories Is Cost

question 93

Multiple Choice

The primary basis of accounting for inventories is cost. A departure from the cost basis of pricing the inventory is required when:

• A) The general price level has changed materially.
• B) The FIFO method of inventory valuation is adopted.
• C) There is evidence that the replacement cost of the goods at the date they are sold will be less than their cost when purchased.
• D) There is evidence that the net realizable value of the goods has declined.

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Definitions:

Estuaries

Coastal bodies of water where fresh water from rivers meets and mixes with salt water from the ocean.

Irregular Coast

A coastline that has a complex shape, often characterized by numerous bays, peninsulas, and inlets.

Submarine Canyons

Steep-sided valleys cut into the seabed of the continental slope, sometimes extending well onto the continental shelf.

Shoreline Hazards

Risks associated with the coastal areas, including erosion, flooding, and storms, impacting ecosystems and human settlements.