With regards to inventory which of the following would be classed as conservative accounting?

Question

Quizplus · Accepted Answer

Consistently and quickly applying the lower of cost and net realisable value rule is a conservative accounting method as it results in a lower valuation of inventory and therefore a potentially lower net income. This approach is considered conservative because it errs on the side of caution and avoids the potential for overstating inventory or income.

B, C, and D would not be considered conservative accounting practices as they could potentially result in overstated inventory values and higher net income. Being slow to write down slow-moving inventory or still recording obsolete inventory as an asset can result in an inflated inventory balance that does not accurately reflect the true value of inventory. Overstating inventory by including non-existent inventory in accounts is an outright fraud and is not an accepted accounting practice.

With Regards to Inventory Which of the Following Would Be