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

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The lower-of-cost-or-market rule is based on the conservatism principle in accounting, which requires companies to recognize all possible losses but recognize gains only when they are certain. This principle is intended to provide a degree of caution in financial reporting and to ensure that financial statements are not overly optimistic. The lower-of-cost-or-market rule requires companies to adjust their inventory values downwards when the market price of the inventory falls below its cost. This adjustment is necessary to reflect the decrease in value of the inventory and to avoid overvaluing inventory in the financial statements.

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