Under GAAP, a retailer's company's inventory is typically stated at
A) Historical cost
B) The lower of historical cost or market
C) Amortized cost
D) Net realizable value

Question

Quizplus · Accepted Answer

Under GAAP, inventory is typically stated at the lower of historical cost or market, also known as the lower of cost or market method. This means that inventory is recorded at the cost at which it was acquired, but if the market value of the inventory falls below its historical cost, the inventory is written down to its current market value. This conservative approach ensures that inventory is not overstated on the balance sheet.

Under GAAP, a Retailer's Company's Inventory Is Typically Stated at