What Effect Would an Adjustment to Record Inventory at the Lower-Of-Cost-Or-Market

question 83

Multiple Choice

What effect would an adjustment to record inventory at the lower-of-cost-or-market have on the company's financial statements?

• A)An increase to assets.
• B)An increase to stockholders' equity.
• C)A decrease to revenue.
• D)An increase to expense.

---

Definitions:

After-Tax Cost of Debt

The net cost to a company for borrowing funds after factoring in tax deductions on interest expenses.

Coupon Rate

The yearly rate of interest that the issuer of a bond pays to bondholders, typically shown as a percent of the bond's nominal value.

Tax Rate

The part of an individual's or corporation's earnings that is subject to taxation.

Debt-Equity Ratio

The ratio indicating a corporation's reliance on debt financing, found by dividing its total debts by the equity held by its shareholders.