The lower-of-cost-or-net realizable value basis of valuing inventories is an example of

Question

Quizplus · Accepted Answer

The lower-of-cost-or-net realizable value basis reflects the principle of conservatism. This principle requires that a company records potential losses from inventory write-downs immediately but records gains only when realized, ensuring that the financial statements present a prudent and cautious picture of the company's financial health.

The Lower-Of-Cost-Or-Net Realizable Value Basis of Valuing Inventories Is an Example