The lower of cost and net realizable value basis of valuing inventories ensures that inventories are
A)valued at their current cost.
B)valued at their selling price.
C)not under-valued.
D)not over-valued.

Question

Quizplus · Accepted Answer

The lower of cost and net realizable value (NRV) method ensures that inventory is not recorded on the balance sheet at an amount greater than what the company expects to realize from its sale. This prevents overstatement of assets and income.

The Lower of Cost and Net Realizable Value Basis of Valuing