When the cost-of-goods-sold method is used to record inventory at market
A) there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.
B) a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline.
C) only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements.
D) the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold.

Question

Quizplus · Accepted Answer

The cost-of-goods-sold method involves substituting the market value figure for ending inventory for cost. In this method, the loss is buried in the cost of goods sold and is not recorded separately in the financial statements.

When the Cost-Of-Goods-Sold Method Is Used to Record Inventory at Market