Lower-of-cost-or-market
A) is most conservative if applied to the total inventory.
B) is most conservative if applied to major categories of inventory.
C) is most conservative if applied to individual items of inventory.
D) must be applied to major categories for taxes.

Question

Quizplus · Accepted Answer

Lower-of-cost-or-market is most conservative if applied to individual items of inventory as it ensures that any decline in the value of a specific item is recognized and recorded immediately. Applying it to major categories of inventory or to the total inventory would delay the recognition of losses and result in a less accurate representation of the inventory's value. The application of lower-of-cost-or-market for taxes is generally based on IRS regulations and may vary depending on the specifics of a business's inventory.

Lower-Of-Cost-Or-Market