Which of the Following Statements About the Lower of Cost

question 92

Multiple Choice

Which of the following statements about the lower of cost or market rule is not correct?

• A) The lower of cost or market rule sometimes causes the book value of inventory to be written down below cost, but will never cause the book value of inventory to be increased above cost.
• B) The amount of inventory write-down is an expense which most companies report as cost of goods sold.
• C) Lower of cost or market is an inventory cost method used to determine cost of goods sold and ending inventory.
• D) The lower of cost or market (LCM) rule results in reporting inventory conservatively, at an amount that does not exceed its actual value.

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Political Decision-making

The process of making decisions within the framework of a political entity or organization, often involving considerations of power, policy, and governance.

Groupthink Causes

Factors that lead to groupthink, a psychological phenomenon where the desire for harmony and conformity in a group results in irrational or dysfunctional decision-making outcomes.

Voting

The act of making a choice among options or deciding in an election or poll, typically done secretly.