Which of the Following Is False Concerning the Lower-Of-Cost-Or-Net Realisable

question 97

Multiple Choice

Which of the following is false concerning the lower-of-cost-or-net realisable value rule when it is applied to the valuation of inventory?

• A) Inventory must be written up (increased) if the net realisable value of ending inventory is greater than the cost of ending inventory as estimated using the LIFO method.
• B) Inventory must be written down (decreased) if the net realisable value of ending inventory is less than the cost of ending inventory as estimated using the average cost method.
• C) Inventory must be written down (decreased) if the current market cost of ending inventory is less than the cost of ending inventory as estimated using the FIFO method.
• D) Writedowns (decreases) are more common in times of rising prices when FIFO is used.

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Definitions:

Theory of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and others, and understand that these may differ from one's own.

Mental States

Conditions of the mind that can influence behavior and perception, such as thoughts, feelings, beliefs, and desires.

False Belief Tasks

Tasks used in developmental psychology to assess the understanding that other people can hold beliefs about the world that are different from one's own and may be false.

Autism Spectrum Disorder

A range of neurodevelopmental conditions characterized by challenges with social skills, repetitive behaviors, and communication.