The Lower-Of-Cost-Or-Market Rule May Be Applied by Comparing the Market

question 138

Multiple Choice

The lower-of-cost-or-market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on any of the following except:

• A)Individual inventory items.
• B)Major inventory categories.
• C)The entire inventory.
• D)Industry inventory standards.

---

Definitions:

Insurance

A monetary service that offers coverage against possible future harms or losses in return for a premium payment.

Adverse Selection

Adverse selection is a situation in financial markets where there is asymmetric information leading buyers or sellers to make decisions that can result in the market becoming skewed or unbalanced, often seen in insurance markets.

Insurance

A contract represented by a policy, where an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Risk Averse

A description of an individual's or entity's preference to avoid risk, often by choosing options with certain outcomes over those with higher degrees of uncertainty.