The Lower-Of-Cost-And-Net-Realizable-Value Rule May Be Applied by Comparing the Market

question 51

Multiple Choice

The lower-of-cost-and-net-realizable-value rule may be applied by comparing the market value of the inventory to the cost of the inventory based on:

• A) Individual inventory items
• B) Major inventory categories
• C) The entire inventory
• D) Any of the three: individual inventory items, major inventory categories, or the entire inventory.

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Definitions:

Acceptance

The act of agreeing to the terms of an offer, thereby forming a contract.

Legally Enforceable Contract

An agreement between parties that is recognized by law and can be enforced in court if not fulfilled.

Breached

Violation or breaking of a law, duty, or agreement.

Consideration

In contract law, consideration refers to something of value that is exchanged between parties as part of an agreement.