Which of the Following Statements Regarding the Application of the Lower-Of-Cost-Or-Market

question 53

Multiple Choice

Which of the following statements regarding the application of the lower-of-cost-or-market method is true?

• A) Generally, historical cost is lower than the market value so the lower-of-cost-or-market rule is applied.
• B) When the lower-of-cost-or-market method is used, inventories are valued at their selling price.
• C) The lower-of-cost-or-market method is most commonly applied on a total inventory basis because it is a more conservative approach.
• D) The lower-of-cost-or-market method is an exception to the historical cost principle.

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