If a Company Is Too Conservative, and Records Too Large

question 34

True/False

If a company is too conservative, and records too large an adjustment for a "lower of cost or market" adjustment in one period, then its income in later periods will be reduced when the estimation error is corrected.

---

Definitions:

U.S. Constitution

The supreme law of the United States that outlines the national framework of government, consisting of the preamble, seven original articles, and 27 amendments.

Civil Law Systems

Legal systems derived from Roman law, prevalent in Europe and Latin America, focusing on codified laws rather than judicial decisions.

Legislative Enactments

Laws or statutes formally passed or approved by a legislative body.

Treaty

An agreement under international law entered into by sovereign states and international organizations.