What Accounting Concept Is Employed When Using The Lower-Of-Cost-Or-Market Valuation?

(Correct Answer Below)

What Accounting Concept Is Employed When Using The Lower-Of-Cost-Or-Market Valuation?

a. Economic entity concept b. Revenue recognition c. Conservatism d. Cost constraint e. Going concern assumption
Front

Advertisement

c. Conservatism Conservatism dictates the lower-of-cost-or-market inventory valuation. Inventory that has not yet sold has not reached revenue recognition. In simple terms, conservatism means that accounting rules are designed to report assets, income, etc. on a conservative basisÑthat financial reports should not overstate a company assets, profits, etc. The lower-of-cost-or-market principle avoids overstating ending inventory on a company's balance sheet
Enter another question to find a notecard:

About the flashcard:

This flashcard is meant to be used for studying, quizzing and learning new information. Many scouting web questions are common questions that are typically seen in the classroom, for homework or on quizzes and tests. Flashcards vary depending on the topic, questions and age group. The cards are meant to be seen as a digital flashcard as they appear double sided, or rather hide the answer giving you the opportunity to think about the question at hand and answer it in your head or on a sheet before revealing the correct answer to yourself or studying partner. Some questions will include multiple choice options to show you the options involved and other questions will just have the questions and corrects answers. Simply reveal the answer when you are ready to check your work. Absolutely no cheating is acceptable.

You May also Like:

[wcp-carousel id="1853"]