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

question 135

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.

---

Definitions:

Subsidiary Ledger

A detailed ledger that contains the individual accounts related to a specific category, supplementing the general ledger.

Consignment

An arrangement where goods are left with a third party to sell, but ownership remains with the supplier until the goods are sold.

Consignee

The retailer in a consigned inventory arrangement.

Retailer

A business entity that sells goods or services directly to consumers through various distribution channels to earn a profit.