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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Definitions:

Thorndike

Refers to Edward L. Thorndike, an American psychologist famous for his work on learning theory that led to the development of operant conditioning within behaviorism.

Reinforcement Strategies

Techniques used to encourage desired behaviors or discourage unwanted ones by providing consequences or rewards.

Social Learning Theory

A theory that suggests people learn from observing others, through modeling, imitation, and social reinforcement.

Rotter's Theory

A psychological theory developed by Julian B. Rotter that emphasizes the importance of an individual's perceived control over outcomes, known as locus of control.