A Company Has Inventory with a Market Value of $217,000

question 140

True/False

A company has inventory with a market value of $217,000 and a cost of $241,000. According to the lower of cost or market, the inventory should be written down to $217,000.

---

Definitions:

Bad Debts Expense

Expenses linked to accounts receivable that a firm anticipates will not be collected.

Allowance Method

An accounting technique used to account for bad debts, which estimates uncollectible accounts receivable and creates a provision for them.

Accounts Receivable

Financial dues from customers to an organization for products or services that have been dispensed but not reimbursed.

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's receivables that may not be collectible.