When Applying the Lower-Of-Cost-Or-Market Rule, Market Value Generally Refers To

question 7

Multiple Choice

When applying the lower-of-cost-or-market rule, market value generally refers to:

• A)FIFO cost using the periodic method.
• B)LIFO cost using the periodic method.
• C)current sales price of the inventory.
• D)current replacement cost.

---

Definitions:

Dividend Payout Ratio

A metric that measures the portion of a company's earnings paid out to shareholders as dividends.

Market Rate of Return

The average return investors expect to earn from an investment in the general market.

Flotation Costs

Costs a company faces when it issues new securities, encompassing fees for legal services, administration, and underwriting.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its security holders to finance its assets.