Which of the Following Statements About the Lower of Cost

question 154

Multiple Choice

Which of the following statements about the lower of cost or market rule/net realizable value is not correct?

• A)The lower of cost or market/net realizable value 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/net realizable value (LCM/NRV)rule results in reporting inventory conservatively,at an amount that does not exceed its actual value.

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