The practice of using the lower of cost and net realizable value to evaluate inventory reflects which of the following accounting principles?

Question

Quizplus · Accepted Answer

The use of the lower of cost and net realizable value method is based on the principle of conservatism, which requires accountants to be cautious in their estimates and to recognize losses as soon as they are anticipated. This principle helps ensure that financial statements present a fair and accurate view of a company's financial position.

The Practice of Using the Lower of Cost and Net