The Lower-Of-Cost-Or-Market Value (LCM)rule ________

question 69

Multiple Choice

The lower-of-cost-or-market value (LCM) rule ________.

• A) replaces the use of specific identification, FIFO, LIFO, or weighted-average inventory costing methods.
• B) violates the conservatism principle
• C) requires that merchandise inventory be reported in the financial statements at the lower of the historical cost or the selling price of the inventory
• D) is an accounting issue separate from applying an inventory costing method

---

Definitions:

Short-Run Price

The price level of goods or services in a market that is determined over a short period, where some costs can be considered fixed.

Special Price

A discounted rate offered for a product or service outside of its standard pricing.

Differential Cost

The difference in total cost that will result from selecting one alternative over another in decision-making processes.

Unit Cost

The cost incurred to produce, store, or purchase one unit of a product or service.