The main objective of the lower-of-cost-or-market rule is to ________.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market rule requires inventory to be reported at the lower of its cost or market value. This rule ensures that inventory is not overstated on the balance sheet and that a conservative inventory value is reported. This conservative reporting can lead to a lower gross profit, but the main objective of the rule is not to report a conservative gross profit.

The Main Objective of the Lower-Of-Cost-Or-Market Rule Is to ________