Which Statement Concerning Lower-Of-Cost-Or-Net-Realizable-Value (LCNRV) Is Incorrect

question 119

Multiple Choice

Which statement concerning lower-of-cost-or-net-realizable-value (LCNRV) is incorrect?

• A)LCNRV is an example of a company choosing the accounting method that will be least likely to overstate assets and income.
• B)Under the LCNRV basis, market does not apply because assets are always recorded and maintained at cost.
• C)The LCNRV basis is justified because of a decline in the selling price of the inventory item.
• D)LCNRV is applied after one of the cost flow assumptions has been applied.

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Definitions:

Budget Constraint

An economic model that depicts the combination of goods and services an individual, household, or firm can purchase, given their income and prevailing prices.

Leftover Income

The amount of money an individual or household has after all expenses and taxes have been paid; also known as disposable income.

Bundle

A collection or group of goods or services that are considered together as a single combined unit.

Monthly Income

The total amount of income received on a monthly basis from all sources.