Which of the Following Statements Does Not Accurately Describe the Effects

question 30

Multiple Choice

Which of the following statements does not accurately describe the effects of a write-down of inventory on December 31, 2016 using the lower of cost or market (LCM) valuation method?

• A)The 2016 gross profit decreases.
• B)The 2017 cost of goods sold is effectively decreased if the inventory is sold during 2017.
• C)The 2016 ending inventory is decreased.
• D)The 2017 gross profit is not affected if the inventory is sold during 2017.

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Definitions:

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, which includes any fees or additional costs associated with the transaction.

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, which includes any fees or additional costs associated with the transaction, expressed as a percentage.

Effective Annual Rate

The genuine rate of interest that an investment, savings account, or loan delivers, factoring in the effects of compounding.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage rate.