An Adjustment to Ending Inventory Under the Lower of Cost

question 66

Multiple Choice

An adjustment to ending inventory under the Lower of cost and net realizable value (LC&NRV) rule would be most likely to be recorded by a company that sells:

• A)Plastic storage containers.
• B)Paper clips.
• C)Body lotion.
• D)Designer clothes.

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Definitions:

Direct Approach

A method of preparing the statement of cash flows where major categories of gross cash receipts and payments are reported.

Indirect Approach

A method of communication or problem-solving that is not straightforward, often involving suggestion or implication rather than direct statements.

Investing Activities

Financial operations that involve the purchase and sale of long-term assets and other investments not considered cash equivalents.

Financing Activities

Refers to the transactions and events that affect long-term liabilities and equity of a company, including issuing debt, selling shares, and paying dividends.