When inventories are written down due to the application of the lower of cost or market (LCM)rule, which of the following is usually increased?

Question

Quizplus · Accepted Answer

When inventories are written down due to the application of the lower of cost or market (LCM) rule, it means that the market value of the inventory is lower than its cost, so the cost of goods sold is increased. This adjustment helps to ensure that the inventory is stated at its current market value, which reflects a more accurate representation of the company's financial position. Therefore, operating expenses, accumulated depreciation-inventory, and inventories are not affected.

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