At the End of a Reporting Period,Gamble Corporation Determines That

question 66

Multiple Choice

At the end of a reporting period,Gamble Corporation determines that its ending inventory has a cost of $300,000 and a market value of $230,000.What would be the effect(s) of the adjustment to write down inventory to market value?

• A)Decrease total assets.
• B)Decrease net income.
• C)Increase retained earnings.
• D)a and b.

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Definitions:

U.S.GAAP

United States Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in the U.S.

Temporal Method

An accounting method for converting foreign currency transactions based on exchange rates at the time the transactions are made.

Translation Exchange Rates

The rates used to convert the financial statements of a company into the currency of a different country for reporting purposes.

Historical Rate

Refers to the exchange rate between two currencies at a past date, useful for historical financial analysis.