Multiple Choice
Better Buy has six CD players in inventory on December 31. The players were purchased in November for $170. The price lists from suppliers indicate the current replacement cost of a CD player to be $168. What is the effect on gross profit if Better Buy values its ending merchandise inventory using the lower-of-cost-or-market rule?
A) The gross profit would increase by $2.
B) The gross profit would not be affected.
C) The gross profit would decrease by $12.
D) The gross profit would increase by $12.
Correct Answer:
Verified
Correct Answer:
Verified
Q35: When a company uses the first-in,first-out (FIFO)method,the
Q40: A company purchased 100 units for $20
Q41: A way to estimate the cost of
Q43: Better Buy has six CD players in
Q45: A company is uncertain whether a complex
Q49: The ending merchandise inventory for the current
Q73: When a company uses the last-in,first-out (LIFO)method,the
Q77: The Merchandise Inventory account is debited to
Q102: Which of the following is the correct
Q103: An overstatement of ending merchandise inventory in