The Lower-Of-Cost-Or-Market (LCM)rule Violates the Historical Cost Principle

question 31

True/False

The lower-of-cost-or-market (LCM)rule violates the historical cost principle.

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Definitions:

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and investments not related to the entity's primary business operations.

Financing Activities

Transactions and events where cash is raised or paid back to finance the company's operations, including issuing debt, equity, and paying dividends.

Operating Activities

Transactions and other events that are not investing or financing activities which affect the net income of a company.

Cash Flows

The movement of money into and out of a business, project, or financial product.