Which One of the Following Statements Is True with Regard

question 77

Multiple Choice

Which one of the following statements is true with regard to the lower of cost or market rule?

• A)If the direct method is used in applying the lower of cost or market rule, the loss or loss recovery due to market valuation changes is included in cost of goods sold.
• B)The lower of cost or market rule must be applied on an individual item basis for financial accounting purposes.
• C)With the application of the lower of cost or market rule using the direct method, the account, Allowance to Reduce Inventory to Market, is reported on the balance sheet as a contra asset.
• D)The lower of cost or market rule is primarily an application of the going concern assumption.

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Definitions:

Supply

The total amount of a specific good or service available for purchase at any given time.

Wheat Farmer

An individual or entity engaged in the cultivation of wheat as a commercial agricultural activity.

Weather

The state of the atmosphere at a particular place and time, encompassing conditions such as temperature, precipitation, and wind.

Quality

A measure of excellence or a state of being free from defects, deficiencies, and significant variations, brought by strict and consistent adherence to measurable and verifiable standards.