At the End of the 2013 Accounting Period DeFazio Company

Multiple Choice

At the end of the 2013 accounting period DeFazio Company determined that the market value of its inventory was $39,900. The historical cost of this inventory was $40,700. DeFazio uses the perpetual inventory method. The entry necessary to reduce the inventory to the lower of cost or market will

A) increase assets and increase liabilities.
B) decrease assets and decrease liabilities.
C) increase assets and increase net income.
D) decrease assets and decrease net income.