The lower-of-cost-or-market method is used for inventory despite being less conservative than valuing inventory at market value.

Name: The lower-of-cost-or-market method is used for inventory despite being less conservative than valuing inventory at market value.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method is actually more conservative than valuing inventory at market value because it allows for the recognition of losses when the market value falls below the cost, thus not overstating the value of inventory.

The Lower-Of-Cost-Or-Market Method Is Used for Inventory Despite Being Less