The lower-of-cost-or-market rule is based on accounting:

Question

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The lower-of-cost-or-market rule is a principle of conservatism in accounting. It requires that assets be initially recorded at cost and subsequently adjusted downward to market value when market values decline below their cost. This principle reflects the idea that in the face of uncertainty, accountants should err on the side of understating assets and income, rather than overstating them.

The Lower-Of-Cost-Or-Market Rule Is Based on Accounting