3. In a price-access economy, a significant reduction in inventory purchases by a company coupled with steady demand from customers can cause a substantial increase in a company's net income when using the price method.

a. LIFO b. Average cost c. FIFO d. Specific Identification

4. Assuming the net realizable value of the inventory is less than the cost, and the difference is considered substantial and rare. The inventory adjustment entry under the provision method when using periodic inventory will include

Select one:

a. a debit to the allowance account to reduce inventory to market.

b. a debit to a loss account.

c. a credit to the inventory account for the amount of the loss.

d. a debit to the cost of goods sold account for the amount of the loss.