If the Replacement Cost of Inventory Is Less Than Its

question 135

Multiple Choice

If the replacement cost of inventory is less than its historical cost, the company will write down the inventory by:

• A)debiting Cost of Goods Sold and crediting Inventory.
• B)debiting Inventory and crediting Cost of Goods Sold.
• C)making a note in the financial statements only.
• D)debit Inventory for replacement cost, credit Inventory for historical cost.

---

Definitions:

Distribution

In statistics, the way in which values of a variable or frequencies of occurrence are spread out over a range.

Earnings

The amount of money that an individual or business receives in exchange for providing a good or service or through investing capital.

Sorority

A sorority is a social organization at colleges and universities primarily for female students, often characterized by a system of values, sisterhood, and philanthropic activities.

Normal Curve

A symmetrical bell-shaped curve that represents the distribution of many types of data in statistics.