The Lower-Of-Cost-Or-Market Rule Demonstrates Accounting Conservatism in Action

question 10

True/False

The lower-of-cost-or-market rule demonstrates accounting conservatism in action.

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Definitions:

Accounting Events

Transactions or occurrences that result in changes to the financial statements of a company, requiring recognition or disclosure.

Period-To-Period Consistency

An accounting principle ensuring the application of the same accounting methods and principles from one period to the next to ensure financial comparability.

Debits

Accounting entries that increase assets or expenses or decrease liabilities or equity on a company's balance sheet.

Credits

Accounting entries that increase liabilities or equity or decrease assets, representing the opposite effect of debits in the double-entry bookkeeping system.