The Use of the Lower-Of-Cost-Or-Market Method for Inventory Is an Application

question 78

True/False

The use of the lower-of-cost-or-market method for inventory is an application of the convention of conservatism.

---

Definitions:

Withholding Allowances

A number that employees claim on their W-4 form that reduces the amount of federal income tax withheld from their wages, based on their personal circumstances.

Form 4070

Form 4070 is a tax form used by employees to report tips to their employer, which are then subject to social security and Medicare taxes.

FICA Withholding

Taxes deducted from employees’ paychecks for Social Security and Medicare, based on the Federal Insurance Contributions Act.

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.