Generally Accepted Accounting Principles Require That the Inventory of a Company

question 32

Multiple Choice

Generally accepted accounting principles require that the inventory of a company be reported at:

• A) Selling Price.
• B) Historical cost.
• C) Lower of cost and net realizable value.
• D) Net realizable value.
• E) Retail value.

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Definitions:

Marginal Costs

The additional cost incurred to produce an extra unit of a product or service.

Average Costs

The total costs of production divided by the number of units produced, representing the cost per unit.

Returns To Scale

The change in output resulting from a proportional change in all inputs in the production process; can be increasing, constant, or decreasing.

Increasing Returns To Scale

See Economies of scale.