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:

Political Disagreements

Differences in opinions or positions held by individuals or groups regarding political policies, strategies, or philosophies.

False Consensus Effect

The tendency to overestimate the extent to which others share our beliefs, values, and behaviors.

Speed Limits

Legal restrictions on the maximum speed at which vehicles may travel on particular roadways, intended to enhance safety and reduce accidents.

Projection

A defense mechanism where an individual attributes their own unacceptable feelings or thoughts to someone else.