Generally accepted accounting principles require that the inventory of a company be reported at:
A) Net realizable value
B) Historical cost
C) Lower of cost and net realizable value
D) Replacement cost
E) Purchase price

Question

Quizplus · Accepted Answer

Lower of cost and net realizable value means that inventory should be reported at the lower of its original cost or its expected selling price minus the costs of completion and disposal. This conservative approach ensures that inventory is not overstated on the balance sheet.

Generally Accepted Accounting Principles Require That the Inventory of a Company