If the market value of goods in inventory falls to $26,000 below its cost,the company should:
A)do nothing,because assets are reported at their original purchase price.
B)credit inventory for $26,000.
C)debit inventory for $26,000.
D)use the weighted average cost method since that method provides a more accurate indicator of current value.

Question

Quizplus · Accepted Answer

The company should credit inventory for $26,000 to reflect the lower market value, as per the lower of cost or market rule in accounting.

If the Market Value of Goods in Inventory Falls to $26,000