The use of the lower-of-cost-or-market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method of inventory valuation results in a decrease in the ending inventory value and an increase in the cost of goods sold when the market value declines, which in turn decreases gross profit for the period.

The Use of the Lower-Of-Cost-Or-Market Method of Inventory Valuation Increases