Which of the Following Methods of Applying the Lower-Of-Cost-Or-Market Rule

question 13

Multiple Choice

Which of the following methods of applying the lower-of-cost-or-market rule will result in the fewest write-downs of inventory?

• A)Each individual inventory item.
• B)Average of cost of goods sold for the past three years.
• C)Major classes or categories of inventory.
• D)The entire stock of inventory in aggregate.

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Definitions:

Incidental Beneficiary

A third party who unintentionally benefits from a contract but has no legal right to enforce the contract terms.

Intended Beneficiary

A person for whom a contract is specifically made, who has the right to enforce the terms of the contract, even though they are not a party to it.

Promisee

An individual or entity to whom a promise or commitment is made.

Delegate Duty

The act of assigning one's responsibilities or tasks to another person, typically to someone subordinate.