Where Inventories in an Industry Are Measured by Reference to Historical

question 25

Multiple Choice

Where inventories in an industry are measured by reference to historical cost which of the following measurement rules applies subsequent to initial measurement?

• A) historical cost;
• B) discounted cash flow;
• C) lower of cost and net realisable value;
• D) replacement cost.

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Definitions:

Low Costs

Describes situations or processes that require a minimal amount of financial resources to maintain or complete.

Long-run Economic Profits

Profits that occur when a firm's total revenue exceeds its total costs, including both explicit and implicit costs, over the long term.

Threat Of New Entrants

The potential challenge posed by a new competitor entering an industry or market.