Which method(s) may be used to record a loss due to a price decline in the value of inventory?
A) Loss method.
B) Sales method.
C) Cost-of-goods-sold method.
D) Both the loss method and the cost-of-goods-sold method.

Question

Quizplus · Accepted Answer

Both the loss method and the cost-of-goods-sold method may be used to record a loss due to a price decline in the value of inventory. The loss method involves recognizing the loss as a separate expense on the income statement, while the cost-of-goods-sold method involves adjusting the inventory value on the balance sheet and recognizing the loss through the cost of goods sold on the income statement. Using both methods can provide a more accurate picture of the financial impact of the price decline.

Which Method(s) May Be Used to Record a Loss Due