The lower-of-cost-or-market practice is based on the
A)consistency principle.
B)entity concept.
C)reliability principle.
D)conservatism principle.
E)historical cost concept.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market (LCM) practice is based on the conservatism principle, which requires accountants to be cautious in recording transactions and recognizing gains or losses. LCM allows companies to record inventory at the lower of its cost or its market value.

The Lower-Of-Cost-Or-Market Practice Is Based on the