Lower-of-cost-or-market as it applies to inventory is best described as the
A) drop of future utility below its original cost.
B) method of determining cost of goods sold.
C) assumption to determine inventory flow.
D) change in inventory value to market value.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market rule is used to recognize a loss when the future utility (market value) of inventory drops below its original cost, ensuring that inventory is not overstated on the financial statements.

Lower-Of-Cost-Or-Market as It Applies to Inventory Is Best Described as the