Accountants believe that the write down from cost to net realizable value should not be made in the period in which the price decline occurs.

Question

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Accountants believe that the write down from cost to net realizable value should be made in the period in which the price decline occurs. This is known as the conservatism principle in accounting, where losses are recognized as soon as they are known or reasonably estimated. Delaying the write down could result in overstated assets and income, leading to misleading financial statements.

Accountants Believe That the Write Down from Cost to Net