When the direct method is used to record inventory at market
A)there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.
B)a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline.
C)only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements.
D)the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold.

Question

Quizplus · Accepted Answer

When the direct method is used, the market value is substituted for cost in the ending inventory, and the loss is included in the cost of goods sold, not separately recorded.

When the Direct Method Is Used to Record Inventory at Market