The lower-of-cost-or-market basis of valuing inventories is an example of
A)comparability.
B)the cost principle.
C)conservatism.
D)consistency.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market basis of valuing inventories is an example of conservatism because it requires recognizing losses when the replacement cost of inventory drops below its original cost. This approach is a conservative accounting method because it recognizes losses immediately, even if the loss hasn't been realized yet through the sale of the inventory.

The Lower-Of-Cost-Or-Market Basis of Valuing Inventories Is an Example of