Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method?
A) The journal entry to write-down inventory decreases gross profit.
B) The journal entry to write-down inventory decreases current assets.
C)The journal entry to write-down inventory does not affect pretax income.
D)The journal entry to write-down inventory increases cost of goods solD.The journal entry increases cost of goods sold and therefore decreases gross profit and pretax income. The journal entry also decreases inventory.

Question

Quizplus · Accepted Answer

The journal entry to write-down inventory affects pretax income by increasing cost of goods sold, which reduces pretax income.

Which of the Following Statements Does Not Accurately Describe the Lower