Which of the following statements about inventories is true?
A)U.S. generally accepted accounting principles (GAAP) require the use of lower of cost or market valuation basis for inventories.
B)Last-In, First-Out (LIFO) inventory accounting makes management of income more difficult than First-In, First-Out (FIFO) accounting.
C)During inflation, LIFO inventory accounting tends to overstate the current ratio.
D)FIFO inventory balances generally contain old and outdated costs that have little or no relationship to current costs.

Question

Quizplus · Accepted Answer

This statement is true as per U.S. generally accepted accounting principles (GAAP), inventories are required to be valued at lower of cost or market (LCM) basis. LCM basis means that the inventory should be valued at either the original cost incurred to acquire the inventory or the current market price, whichever is lower.

Which of the Following Statements About Inventories Is True