When inventories are written down due to the application of the lower of cost or market (LCM) rule, the account that is usually increased is
A) Accumulated Depreciation-Inventory
B) Inventories
C) Loss on Decline in Inventory Value
D) Cost of Goods Sold

Question

Quizplus · Accepted Answer

When inventories are written down due to the application of the lower of cost or market (LCM) rule, the account that is usually increased is the Loss on Decline in Inventory Value. This is because the LCM rule requires that inventories be written down to their market value when that value is lower than their cost, resulting in a loss. This loss is typically recorded in the Loss on Decline in Inventory Value account.

When Inventories Are Written Down Due to the Application of the Lower