• Suppose you purchased 500 units of product at $25/unit on 6/1/2023. At the end of the fiscal year, the market value of the 500 units is $20/unit. What action (if any) should be taken at the end of the year?

A. Costs of good sold and the inventory accounts should be adjusted so that the inventory account's balance is equal to the end of period market value.

B. The company should dispose of its inventory at a loss and purchase new inventory so that the cost recorded in their accounting records match the current market value.

C. No action is required. Recorded inventory costs are not influenced by changes in market value after those costs have been recorded into the inventory account.

D. A footnote should be added to the financial statements at year end clarifying to investors that the historical cost and the market value of inventory have diverged.

• Which of the following costing methods is not approved under U.S. GAAP?

A. Average Cost

B. Specific Identification

C. FIFO

D. None of the above.