The lower-of-cost-or-net realizable value basis is an example of the accounting concept of conservatism.

Question

Quizplus · Accepted Answer

Lower-of-cost-or-net realizable value is an example of conservatism because it requires assets to be recorded at the lower of cost or net realizable value, which is a conservative approach to asset valuation. This approach ensures that assets are not overstated on the balance sheet, which is consistent with the conservatism principle in accounting.

The Lower-Of-Cost-Or-Net Realizable Value Basis Is an Example of the Accounting