ACC 304 All Assignments ACC 304 All Assignments | Page 111

c. The closing inventory of the current year is understated.
d. Income of the following year will be understated.
S28. When the cost-of-goods-sold method is used to record inventory
at market
a. there is a direct reduction in the selling price of the product that
results in a loss being recorded on the income statement prior to the
sale.
b. a loss is recorded directly in the inventory account by crediting
inventory and debiting loss on inventory decline.
c. only the portion of the loss attributable to inventory sold during the
period is recorded in the financial statements.
d. the market value figure for ending inventory is substituted for cost
and the loss is buried in cost of goods sold.