All Categories
Alerts
Wishlist
Cart
Sign In
Categories
Current Affairs & GK
Current Affairs
Show All Current Affairs & GK
eBooks
General Aptitude
Arithmetic Aptitude
Data Interpretation
Show All General Aptitude
General Knowledge
Basic General Knowledge
General Science
Show All General Knowledge
Medical Science
Anatomy
Biochemical Engineering
Biochemistry
Biotechnology
Microbiology
Show All Medical Science
Technical
Database
Digital Electronics
Electronics
Networking
Show All Technical
Verbal and Reasoning
Logical Reasoning
Verbal Ability
Verbal Reasoning
Show All Verbal and Reasoning
›
What is the effect of an inventory write-down on the financial statements?
What is the effect of an inventory write-down on the financial statements?
Expand All
Collapse All
Practice Questions
1 question
Q1
What is the effect of an inventory write-down on the financial statements?
Increases net income
Decreases net income
No effect on net income
Increases assets
Show Solution
Copy
An inventory write-down reduces the value of inventory on the balance sheet and results in a loss, which decreases net income.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the effect of an inventory write-down on the financial statements?
Solution:
An inventory write-down reduces the value of inventory on the balance sheet and results in a loss, which decreases net income.
Steps: 5
Show Steps
Step 1: Understand what an inventory write-down is. It means reducing the value of inventory because it is no longer worth as much as before.
Step 2: Recognize that the balance sheet shows the value of a company's assets, including inventory.
Step 3: When an inventory write-down occurs, the value of inventory on the balance sheet decreases.
Step 4: This decrease in inventory value is recorded as a loss on the income statement.
Step 5: A loss on the income statement reduces the company's net income, which is the profit after all expenses.
Related Questions
I
If a company has a net income of $250,000 and total revenue of $1,000,000, what
Question: If a company has a net income of $250,000 and total revenue of $1,000,000, what is the pro..
A
A business incurs a loss of 15% on selling a product for $425. What was the cost
Question: A business incurs a loss of 15% on selling a product for $425. What was the cost price?Opt..
I
If a product is sold for $240 after a discount of 20%, what was the original pri
Question: If a product is sold for $240 after a discount of 20%, what was the original price?Options..
I
If a company has total assets of $1,000,000 and total liabilities of $600,000, w
Question: If a company has total assets of $1,000,000 and total liabilities of $600,000, what is the..
A
A firm has a current ratio of 2:1 and current liabilities of $50,000. What are t
Question: A firm has a current ratio of 2:1 and current liabilities of $50,000. What are the current..
‹
Biology (School & UG)
Chemistry (School & UG)
Civil Engineering
Commerce & Accountancy
Computer Science & IT
Current Affairs & GK
Data Structures & Algorithms
eBooks
Electrical & Electronics Engineering
English (School)
General Aptitude
General Knowledge
General Knowledge & Current Affairs
Languages & Literature
Law & Legal Studies
Major Competitive Exams
Mathematics (School)
Mechanical Engineering
Medical Science
Physics (School & Undergraduate)
Quantitative Aptitude & Reasoning
Social Science (School)
Technical
Verbal and Reasoning
Vocational & Skill Development
›
Soulshift Feedback
×
On a scale of 0–10, how likely are you to recommend
The Soulshift Academy
?
0
1
2
3
4
5
6
7
8
9
10
Not likely
Very likely
✕
↑
