Which of the Following Statements Regarding the Application of the Lower-Of-Cost-Or-Market

question 120

Multiple Choice

Which of the following statements regarding the application of the lower-of-cost-or-market (LCM) rule is true?

• A)Generally,market value is greater than replacement cost.
• B)When the LCM rule is used,inventories are valued at selling price.
• C)The LCM rule is most commonly applied on a total inventory basis because it is a more conservative approach.
• D)The LCM rule is an exception to the historical cost principle.

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Definitions:

Decrease

A reduction in the size, quantity, or degree of something, often in response to changing economic conditions or policies.

Price of Coconuts

The market cost at which coconuts are bought and sold, influenced by supply, demand, and external market conditions.

Movement

In economics, it typically refers to a change in the price or quantity of a good or service in a market.

Decrease in Supply

A situation where the quantity of a good that producers are willing to produce and sell at a given price level falls.