The lower of cost and NRV principle specifies that the comparison is usually applied on
A) total inventory.
B) individual categories of inventory.
C) an item-by-item basis.
D) major categories of inventory.

Question

Quizplus · Accepted Answer

The lower of cost and NRV principle specifies that the comparison should be applied on an item-by-item basis, as it allows for a more accurate determination of the value of inventory. This means that the cost and NRV of each individual item should be compared, and the lower of the two values should be used to determine the value of that item in the inventory. This principle is important for ensuring that inventory is valued at a conservative estimate of its net realizable value.

The Lower of Cost and NRV Principle Specifies That the Comparison