The lower of cost or market rule requires a business to report inventory at original cost or its current replacement cost,whichever is lower.

Question

Quizplus · Accepted Answer

The lower of cost or market rule requires a business to report inventory at its original cost or its current replacement cost, whichever is lower, to ensure that inventory is not overvalued on the balance sheet. This helps to ensure accurate financial reporting.

The Lower of Cost or Market Rule Requires a Business