Which of the Following Is Not True Regarding the Lower-Of-Cost-Or-Market

question 49

Multiple Choice

Which of the following is not true regarding the lower-of-cost-or-market basis for inventory valuation?

• A)It is a conservative accounting policy.
• B)It recognizes losses from decreases in market value before a sale occurs.
• C)It recognizes gains from increases in market value above original acquisition cost only when a sale occurs.
• D)It reports inventories on the balance sheet at amounts that are never greater, but may be less, than acquisition cost.
• E)It reports inventories on the balance sheet at amounts that are equal to the acquisition cost less a normal profit margin.

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Definitions:

Social Insurance

A system where government or a public agency provides financial support to individuals to cover specific risks such as unemployment, aging, or disability.

Government Spends

The total financial expenditures of a government on public services, infrastructure, defense, welfare, and administration.

Insurable Interest

A party who has an interest in property or life.

Beneficiary Payment

A payment made to someone entitled to receive benefits from a legal arrangement or insurance policy.