The lower of cost or net realisable value procedure is used with which of the following inventory methods?
I. FIFO
II. LIFO
III. Weighted average
IV. The perpetual method
A) IV only
B) I and III only
C) I, II, III and IV
D) I, III and IV only

Question

Quizplus · Accepted Answer

The lower of cost or net realisable value procedure can be used with FIFO, weighted average and the perpetual method. However, it cannot be used with LIFO as it already assumes that the inventory being sold is the newest and most expensive, making it impossible to determine a lower cost. Therefore, the correct answer is D, which includes I, III and IV only.

The Lower of Cost or Net Realisable Value Procedure Is