Under the lower of cost and net realizable value basis, the adjusting entry to record a decline in net realizable value below cost includes a
A) credit to the Sales account.
B) debit to the Cost of Goods Sold account.
C) credit to the Cost of Goods Sold account.
D) debit to the Inventory account.

Question

Quizplus · Accepted Answer

Under the lower of cost and net realizable value rule, if the net realizable value of inventory falls below its cost, an adjusting entry is made by debiting the Cost of Goods Sold account to reflect the loss in value.

Under the Lower of Cost and Net Realizable Value Basis