Recording a Lower of Cost or Market (LCM)adjustment involves which of the following generic journal entries?
A) Debit Sales Revenue and Inventory
B) Debit Cost of Goods Sold and credit Inventory
C) Debit Loss on Goods Sold and credit Inventory
D) Debit Retained Earnings and credit Inventory

Question

Quizplus · Accepted Answer

A Lower of Cost or Market (LCM) adjustment involves reducing the value of inventory to the lower of its cost or its market value. This is done by debiting cost of goods sold and crediting inventory in order to reflect the decrease in value. The other choices do not accurately reflect the nature of a LCM adjustment.

Recording a Lower of Cost or Market (LCM)adjustment Involves Which