When the market value of inventory falls below its cost,no adjustment to the accounting records is needed.

Question

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When the market value of inventory falls below its cost, an adjustment to the accounting records is needed. This adjustment is called a write-down or write-off and it reduces the value of inventory on the balance sheet to its lower market value. Failure to make this adjustment can result in overstating the value of inventory and the company's profit margins.

When the Market Value of Inventory Falls Below Its Cost,no