Which of the Following Statements Regarding the Lower of Cost

question 71

Multiple Choice

Which of the following statements regarding the lower of cost or market rule is not true?

• A)The lower of cost or market rule sometimes causes the book value of inventory to be written down below cost,but will never cause the book value of inventory to be increased above cost.
• B)The amount of inventory write-down is an expense which most companies report as cost of goods sold.
• C)Lower of cost or market is an inventory cost method used to determine cost of goods sold and ending inventory.
• D)The lower of cost or market rule is based on the conservatism concept.

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Definitions:

Hostile Audience

Describes an audience that is initially unreceptive, skeptical, or antagonistic towards the speaker or message.

Analyzing the Audience

The process of examining and understanding the characteristics, needs, and preferences of the intended recipients of a message.

Conducting Research

The systematic investigation into and study of materials and sources to establish facts and reach new conclusions.

Employee Benefit Costs

The expenses incurred by employers to provide non-wage compensations such as health insurance, retirement plans, and time off to their employees.