If Year-End Inventory Is Reduced from Cost to a Lower

question 80

Multiple Choice

If year-end inventory is reduced from cost to a lower replacement cost, which of the following accurately depicts the results?

• A)The capital account balance is increased and beginning inventory of the next period is reduced by the same amount.
• B)Cost of goods sold is reduced and beginning inventory of the next period is reduced by the same amount.
• C)Year-end inventory is reduced and cost of goods sold is reduced by the same amount.
• D)Cost of goods sold is increased and ending inventory is decreased by the same amount.

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Definitions:

OLTP

Online Transaction Processing (OLTP) refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing.

Intellectual Capital

The intangible value of a business, covering its people (human capital), the value relating to its relationships (relational capital), and everything that is left when the employees go home (structural capital), which include the company's images, processes, data, patents, copyrights, and other intellectual property.

Knowledge

Information, understanding, or skills gained through experience or education; the theoretical or practical understanding of a subject.

Wisdom

The ability to apply knowledge, experience, understanding, and common sense in a way that is insightful, and often involves a deep understanding of people, things, events, or situations, resulting in a balanced judgement.