All of These Statements About the Presentation of Inventory in Financial

question 54

Multiple Choice

All of these statements about the presentation of inventory in financial reports are correct except which of the following?

• A) The assumption used to assign costs to inventory should be disclosed.
• B) The general basis of valuation should be shown,e.g. cost, NRV.
• C) Inventory shown on the balance sheet should always be in a saleable condition.
• D) Inventory should be classified into its current and non-current components.

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Definitions:

Decreasing-Cost Industry

An industry where the average cost of production decreases as the industry's output increases, often due to economies of scale.

Long-Run Industry Supply Curve

A graphical representation that shows the relationship between the price of a good and the total output of the industry over time, assuming all inputs are variable.

LRAC Curve

the Long-Run Average Cost curve, showing the lowest average cost at which any output level can be produced when all inputs are variable.

Increasing-Cost Industry

An industry where the costs of production increase as the output expands, often due to factors like resource depletion and higher input prices.