ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Insurance cost is the cost associated with the loss of inventory items that are broken, damaged, spoiled, or stolen.
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True
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False
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -The damaged stock is valued at fair market value, which is the current purchase price for the same inventory items. This amount may be lower than the original purchase price. Set up an inventory write-off expense account to record the value of the damaged inventory.
Detailed explanation-2: -If inventory loses all its value because it’s spoiled, damaged, obsolete or stolen, the accounting process required to reflect that loss is known as a write-off.
There is 1 question to complete.