a. The cost of sales of the following year will be understated.
b. The current year ' s income is understated.
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.