When the cost-of-goods-sold method is used to record inventory at net realizable value
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 net realizable value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold.

Question

Quizplus · Accepted Answer

When using the cost-of-goods-sold method to record inventory at net realizable value, the net realizable value is used instead of cost for ending inventory, and any loss is included in the cost of goods sold, not separately identified.

When the Cost-Of-Goods-Sold Method Is Used to Record Inventory at Net