The Lower of Cost or Net Realizable rule is based on which accounting principle?

Question

Quizplus · Accepted Answer

The Lower of Cost or Net Realizable rule is based on the conservatism principle, which requires accountants to anticipate and provide for potential losses, even if they have not yet occurred. This principle dictates that an entity should choose the valuation method that is most likely to result in a conservative (i.e. lower) net income or asset value.

The Lower of Cost or Net Realizable Rule Is Based