The Modifying Convention of Conservatism Requires That Inventory Be Presented

question 4

Multiple Choice

The modifying convention of conservatism requires that inventory be presented on the balance sheet at

• A) cost.
• B) market value.
• C) either cost or market value,whichever is lower.
• D) average cost during the period.

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Definitions:

Gaap

Generally Accepted Accounting Principles are the standard framework of guidelines for financial accounting used in any given jurisdiction, commonly the U.S.

Lifo Inventory

A method of inventory valuation where the last items placed into inventory are the first ones taken out, used to calculate the cost of goods sold and ending inventory.

Basic Earnings Per Share (Eps)

Basic Earnings Per Share (EPS) is a calculation used to gauge a company's profitability on a per-share basis, dividing net earnings available to common shareholders by the average outstanding shares.

Net Income

The remaining income of a company after deducting expenses and taxes from the total income generated.