Many Companies State in Their Annual Reports That Inventory Is

question 24

Multiple Choice

Many companies state in their annual reports that inventory is shown at the lower of its cost or market value.This means that the inventory:

• A)Is obsolete.
• B)Has been written down to a carrying value below cost.
• C)Is shown at the lesser of cost or sales value.
• D)Is valued at current replacement cost or historical cost,whichever is less.

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Definitions:

Free Cash Flow

The amount of cash generated by a company after accounting for operating expenses and capital expenditures.

Operating Activities

Activities that relate directly to the operation of a company, including manufacturing, selling, marketing, and administrative functions.

Income Taxes

Government-imposed charges on the income earned by individuals and businesses, calculated according to tax laws.

Capital Expenditures

Expenses for acquiring physical assets or making upgrades to existing ones, which are expected to provide benefits over a long period.