The Practice of Using the Lower-Of-Cost-Or-Market to Evaluate Inventory Reflects

question 91

Multiple Choice

The practice of using the lower-of-cost-or-market to evaluate inventory reflects which of the following accounting principles?

• A)Matching principle.
• B)Revenue recognition.
• C)Conservatism.
• D)Materiality.

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Definitions:

Production Possibilities

The various combinations of goods and services that an economy can produce when all its resources are fully and efficiently employed, illustrated by the production possibilities frontier.

Capital Goods

Assets utilized by businesses to create wealth through the manufacturing of goods and services, including buildings and tools.

Opportunity Cost

The sacrifice of potential rewards from different possibilities upon opting for one alternative.

Production Possibilities Curve

A graphical representation showing the maximum combination of goods or services that can be produced with given resources and technology.