The lower-of-cost-or-market basis of valuing inventories is an example of
A) comparability.
B) the historical cost principle.
C) conservatism.
D) consistency.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market basis of valuing inventories is an example of conservatism, which requires accountants to recognize losses and liabilities as soon as possible, even if there is no evidence of realization. It requires companies to provide for all possible losses but not anticipate gains.

The Lower-Of-Cost-Or-Market Basis of Valuing Inventories Is an Example of