Generally accepted accounting principles (GAAP)require that the inventory be reported at:
A) market value.
B) historical cost.
C) lower of cost or market.
D) retail value.

Question

Quizplus · Accepted Answer

GAAP requires the inventory to be reported at the lower of cost or market value. This means that if the market value of inventory falls below its historical cost, the inventory must be written down to its market value. This ensures that inventory is not overstated on the balance sheet and that the company's financial statements reflect the current value of inventory. Reporting inventory at historical cost or retail value does not accurately reflect the value of inventory and could lead to misleading financial statements.

Generally Accepted Accounting Principles (GAAP)require That the Inventory Be Reported