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Explain Why the Lower of Cost or Market Rule Is

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Essay

Explain why the lower of cost or market rule is used to value inventory.


Definitions:

Owners

Individuals or entities that hold legal possession and control over a business or asset, having a claim on the business's profits and an obligation for its debts.

Corporation

A legal entity that is separate and distinct from its owners, who are known as shareholders, and has its own rights and obligations.

Financial Reports

Documents that provide an overview of a company's financial condition, including income statements, balance sheets, and cash flow statements.

Timeliness

The importance of making or delivering something within an expected time frame for it to be relevant or useful.

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