ACC 304 All Assignments ACC 304 All Assignments | Page 110

26.
Lower-of-cost-or-market
a. is most conservative if applied to the total inventory.
b. is most conservative if applied to major categories of inventory.
c. is most conservative if applied to individual items of inventory.
d. must be applied to major categories for taxes.
27. An item of inventory purchased this period for $15.00 has been
incorrectly written down to its current replacement cost of $10.00. It
sells during the following period for $30.00, its normal selling price,
with disposal costs of $3.00 and normal profit of $12.00. Which of the
following statements is not true?
a. The cost of sales of the following year will be understated.
b. The current year's income is understated.