Which of the Following Statements Relating to the Lower of Cost

question 5

Multiple Choice

Which of the following statements relating to the lower of cost and net realisable is incorrect?

• A) It results in probable losses being recorded in the period when they are first noticed rather than when the sale occurs.
• B) The rule is based on the accounting principle of conservatism (prudence).
• C) The rule is applied separately to each item of inventory or to groups of inventory items.
• D) The gross profit reported in the period when the rule is applied is higher than it otherwise would be.

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Definitions:

Job Depth

Refers to the degree of control, freedom, and discretion employees have over their work.

Planning Duties

Involves outlining tasks, setting goals, and determining the actions required to achieve those goals within an organization.

Evaluating Duties

The process of assessing the responsibilities and functions associated with a specific job role to determine its importance and requirements.

Job Scope

Refers to the breadth and depth of responsibilities and duties associated with a job position, impacting the employee's perceptions and satisfaction with their role.