In general, it is argued that the lower of cost or market rule is supported most closely by which of the following theoretical assumptions?

Question

Quizplus · Accepted Answer

The lower of cost or market rule is a conservative approach to valuation, as it requires companies to value their inventory at the lower of its cost or current market value. This approach aligns with the conservatism assumption in accounting, which suggests that businesses should anticipate and recognize losses in a more timely manner than gains. Therefore, the correct answer is B) conservatism.

In General, It Is Argued That the Lower of Cost