The use of the lower of cost or market method to value inventory indicates a probable loss sustained.This is an application of the accounting principle of
A)matching.
B)going concern.
C)conservatism.
D)consistency.

Question

Quizplus · Accepted Answer

The use of the lower of cost or market method to value inventory is an application of the conservatism principle, which dictates that losses should be recognized as soon as possible, but gains should only be recognized when realized. This principle helps ensure that financial statements are not overstated, as unrecognized losses could have a material impact on the financial statements in future periods.

The Use of the Lower of Cost or Market Method