Why do accountants criticize the practice of carrying inventories at estimated net realizable values?
A)The costs of producing the products are usually estimates.
B)There is usually no clearly defined realizable value for these inventories.
C)The effect of this practice is to recognize income before sales are made.
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

When carrying inventories at estimated net realizable values, the effect is to recognize income before sales are made. This can lead to an overstatement of income and a distortion of the financial statements. As a result, accountants criticize this practice.

Why Do Accountants Criticize the Practice of Carrying Inventories at Estimated