For companies that use FIFO or average cost, inventory is valued at the lower of cost or net realizable value at the end of the reporting period.

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This statement is true. According to the lower of cost or net realizable value (LCNRV) rule, if the net realizable value of inventory is lower than its cost, the inventory should be written down to its net realizable value. This is done to ensure that inventory is not overvalued on the balance sheet. The LCNRV rule applies to companies that use either the FIFO or average cost methods of inventory accounting.

For Companies That Use FIFO or Average Cost, Inventory Is