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QUESTION 17 When comparing the lower of cost to market the appropriate market value is determined before comparing it to the cost the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains O the purpose of the floor is to prevent an excessive gain from being recognized in the future the process is consistent with the principle of conservatism because the goal is to limit excessive swings in gross margin QUESTION 18 it in the current year a purchase was not recorded but the putchased item was included in ending physical inventory which one of the following situations occurs for the current year? O Working capital is understated and net income is overstated Working capital and net income are understated Working capital is overstated, and net income is understated O Working capital and net income are overstated