Which of the Following Amounts Would Be Reported for Inventory

question 29

Multiple Choice

Which of the following amounts would be reported for Inventory on the balance sheet if the cost of an item is $80,the current selling price is $100 and the current replacement cost is $75?

• A) $100
• B) The average of $75 and $80
• C) $80
• D) $75

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Definitions:

Time Value

The concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Payback Period

The amount of time required for an investment to generate cash flows sufficient to recover its initial cost, a measure of an investment's breakeven point in time.

Cash Inflows

The total amount of money being transferred into a business, typically from operational, investment, and financing activities.

Cost Recovery

The process of regaining the value of an expense or investment over time through revenue or savings.