The lower-of-cost-or-market rule for inventory is based on the accounting principle(s)of:

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market rule for inventory is based on both relevance and representational faithfulness accounting principles. It is relevant because it ensures that inventory is reported at the lower of its cost or market value, which is useful information for decision making. It is also faithful representation because it accurately reflects the economic reality of the inventory's value. The disclosure principle is not directly relevant to the lower-of-cost-or-market rule, although disclosure may be required to explain how the rule is applied in practice. Therefore, the best answer is D.

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