A Company Mistakenly Destroys a Unit of Inventory That Originally

Multiple Choice

A company mistakenly destroys a unit of inventory that originally cost $12. The company included the cost of the destroyed unit in cost of goods sold on the income statement, rather than recognizing it as a loss. This action is justifiable based on:

A) the materiality concept.
B) the revenue concept.
C) accounting conservatism.
D) none of the above answers. All of them are incorrect; according to GAAP, a separate loss must be recognized.