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:

Continuity

In electrical systems, the unbroken and complete path for current flow, crucial for the safe and effective operation of circuits.

Diode

A semiconductor device that allows current to flow in one direction only, commonly used for rectification or as a check valve in electrical circuits.

Circuit Resistance

The opposition to the flow of electric current within a circuit, measured in ohms, affecting the circuit's performance and power consumption.

DMM

Stands for Digital Multimeter, an electronic measuring instrument that combines several measurement functions in one unit, such as voltage, current, and resistance.