If the net realizable value declines to an amount lower than cost, the Cost of Goods Sold account will
A) increase.
B) decrease.
C) be adjusted to the cost amount.
D) stay the same.

Question

Quizplus · Accepted Answer

When the net realizable value of inventory declines below its cost, an adjustment is made to reflect this lower value, typically resulting in an increase in the Cost of Goods Sold (COGS). This adjustment reflects the loss in value of the inventory, thereby increasing COGS.

If the Net Realizable Value Declines to an Amount Lower