Under the Principle of Lower of Cost and Net Realizable

question 40

Multiple Choice

Under the principle of lower of cost and net realizable value,when a company has 10 units of inventory A with net realizable value of $50 and a cost of $60,what is the adjustment?

• A)Debit Inventory $100;credit Cost of Goods Sold $100.
• B)Debit Inventory $500;credit Cost of Goods Sold $500.
• C)Debit Cost of Goods Sold $100;credit Inventory $100.

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Definitions:

Process Costing

A costing method used in industries where production is continuous and homogeneous, assigning costs to masses of similar units.

Direct Labor

The wages and salaries paid to workers directly involved in the production of goods or provision of services.

Individual Units

Individual Units refers to discrete or separate items, especially in contexts where products, housing, or inventory are considered on a per-unit basis.

Process Costing Systems

A costing method used in manufacturing where costs are assigned to processes or departments for mass-produced goods.