Use the Following Information

question 36

Multiple Choice

Use the following information:

If the market price at year end is $210,000,what is the write down required?

• A)$0
• B)$40,000
• C)$210,000
• D)$250,000

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Definitions:

Periodic System

An inventory system in which the inventory level is updated and cost of goods sold is calculated at the end of an accounting period.

Perpetual Inventory

An inventory management system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Periodic System

An accounting method used for tracking inventory where updates to the inventory account are made periodically, typically at the end of an accounting period.

LIFO Inventory

A method of inventory valuation where the last items to be added to the inventory are the first ones to be used or sold, assuming that the cost of goods sold is based on the most recent prices.