The lower-of-cost-or-net-realizable-value rule implies that it is unacceptable to report inventory at a cost that is in excess of its net realizable value.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-net-realizable-value rule requires inventory to be reported at the lower of its historical cost or its net realizable value, ensuring that inventory is not overstated on financial statements.

The Lower-Of-Cost-Or-Net-Realizable-Value Rule Implies That It Is Unacceptable to Report