The lower-of-cost-or-market rule is based on the principles of relevance and representational faithfulness.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market rule is based on the relevance principle, which states that financial information should be capable of influencing economic decisions. The rule also aligns with the representational faithfulness principle, which requires financial information to faithfully represent the economic substance of transactions and events. Therefore, the statement is true.

The Lower-Of-Cost-Or-Market Rule Is Based on the Principles of Relevance