Which of the following statements about the lower of cost or market rule is not correct?
A) The lower of cost or market rule sometimes causes the book value of inventory to be written down below cost, but will never cause the book value of inventory to be increased above cost.
B) The amount of inventory write-down is an expense which most companies report as cost of goods sold.
C) Lower of cost or market is an inventory cost method used to determine cost of goods sold and ending inventory.
D) The lower of cost or market (LCM) rule results in reporting inventory conservatively, at an amount that does not exceed its actual value.

Question

Quizplus · Accepted Answer

The lower of cost or market rule is not an inventory cost method; it is a valuation method used to ensure inventory is reported at the lower of its historical cost or market value.

Which of the Following Statements About the Lower of Cost