Barrington Company Must Write Down Its Inventory from Its Cost

question 48

Multiple Choice

Barrington Company must write down its inventory from its cost of $260,000 to its net realizable value of $248,000 at December 31, 2016. The inventory will all be sold in the year 2017. Which of the following provides a correct effect of the write-down?

• A)The 2016 gross profit decreases by $12,000.
• B)The 2017 cost of goods sold increases by $12,000.
• C)The 2017 ending inventory increases by $12,000.
• D)The 2017 gross profit is not affected if the inventory is sold during 2017.

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Definitions:

Horizontal Design

An organizational structure emphasizing collaboration, teamwork, and communication across departments and levels, with few hierarchical barriers.

Functional Design

An approach to design that focuses on practical and efficient aspects, ensuring that every component serves a specific purpose.

Geographic Design

An organizational structure that is arranged based on the geographic locations of its operations or markets.

Duplication of Functions

The scenario in which multiple individuals or departments perform the same tasks or activities, often leading to inefficiency within an organization.