The Lower of Cost and Net Realizable Value Rule for Inventory

question 41

Multiple Choice

The lower of cost and net realizable value rule for inventory is an example of the application of:

• A)The conservatism principle
• B)The historical cost principle
• C)The materiality constraint
• D)The matching principle

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Definitions:

Cybernetic Control System

One that is self‐contained in its performance‐monitoring and correction capabilities.

Performance-Monitoring

The process of continuously analyzing performance metrics to assess the efficiency and effectiveness of various activities in an organization.

Correction Capabilities

The ability of a system or process to adjust and correct itself to maintain or resume proper functioning.

Control Process

A method used to guide and manage tasks, operations, or systems to achieve desired outcomes and standards.