Nguyen Corporation is required to record an inventory write-down of $2,342 as a result of using the lower-of-cost-or-market rule. Which of the following answers correctly shows how this entry would affect the financial statements?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Nguyen Corporation is required to record an inventory write-down of $2,342 as a result of using the lower-of-cost-or-market rule. Which of the following answers correctly shows how this entry would affect the financial statements? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The entry to record the write-down will decrease assets (inventory) and increase expenses (cost of goods sold), which decreases net income and equity. It does not affect the statement of cash flows.

Nguyen Corporation Is Required to Record an Inventory Write-Down of $2,342