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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