The Lower-Of-Cost-And-Net-Realizable-Value Rule Is a Good Example of Conservatism in Accounting

question 60

True/False

The lower-of-cost-and-net-realizable-value rule is a good example of conservatism in accounting.

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Definitions:

Check Outstanding

A check that has been written and recorded in the issuing account but has not yet been cleared or cashed by the bank.

Bank Reconciliation

The process of comparing and adjusting the balance shown on a bank statement with the amount shown in a company’s records to ensure they match.

Internal Control

Procedures and policies implemented by a company to safeguard its assets, ensure accurate and reliable financial reporting, and comply with laws and regulations.

Cash

Liquid assets that a company or individual has available for transactions.