The lower-of-cost-or-market basis for inventory valuation is a conservative accounting policy because

Question

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The lower-of-cost-or-market basis for inventory valuation is considered a conservative accounting policy because it recognizes losses from decreases in market value before the firm sells goods, does not record gains from increases in market value before a sale takes place, and reports inventories on the balance sheet at amounts that are never greater but may be less than acquisition cost.

The Lower-Of-Cost-Or-Market Basis for Inventory Valuation Is a Conservative Accounting