In comparison to the allowance method of applying the lower of cost or market rule to the valuation of inventory, the direct method has which of the following deficiencies?
A) The direct method reports a more conservative amount for net income.
B) For the direct method, the loss or loss recovery due to market valuation changes is included in the cost of goods sold amount.
C) The direct method makes changes to the historical cost of inventory reported on the balance sheet.
D) The direct method can only be used with a perpetual inventory system.
B
You might also like to view...
Consider Figure 6.2. The South Korean subsidy ______________ Mexican manufacturers, since their producer surplus ______________ by $______________.
a. helps, rises, $60 b. helps, rises, $100 c. hurts, falls, $60 d. hurts, falls, $100
Return on equity equals net income divided by average stockholders' equity
Indicate whether the statement is true or false
The public interest is the result of a dialogue about shared values rather than the ________ of individual self-interests.
A) Assertion B) Expansion C) Reduction D) Aggregation
A research firm wants to conduct research to determine what the U.S. population thinks of imported clothing. Describe three primary research options that are available for this type of research. Which option would you recommend that the research firm use? Why?