When the net realizable value of inventory falls below its cost,no adjustment to the accounting records is needed.Companies are required to record an adjustment when net realizable value falls below cost.The adjustment has the effect of reducing assets and increasing expenses.

Question

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When the net realizable value of inventory falls below its cost, companies are required to record an adjustment to reflect the lower value of inventory. This adjustment reduces assets and increases expenses.

When the Net Realizable Value of Inventory Falls Below Its