A specific exception to the use of historical cost to value assets is if the net realisable value of inventories falls below cost. In this case the justification for the use of market value rather than cost relies on the:
A)materiality principle.
B)comparability principle.
C)cost versus benefit principle.
D)conservatism principle.

Question

Quizplus · Accepted Answer

The conservatism principle justifies using the lower of cost or net realizable value for inventories to avoid overstating assets and income.

A Specific Exception to the Use of Historical Cost to Value