The Statement Relating to the Lower of Cost and Net

question 56

Multiple Choice

The statement relating to the lower of cost and net realisable value rule that is untrue is which of the following?

• 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 gross profit reported in the period when the rule is applied is higher than it otherwise would be.
• D) The rule is applied separately to each item of inventory or to groups of inventory items.

Apply the concept of minimum efficient scale in the context of firm size and cost management.

Identify the factors contributing to economies of scale and how they affect firm production and costs.

Analyze the operational and managerial challenges leading to diseconomies of scale.

Explain the significance of technological advancements on production costs.

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Definitions:

The United States

A federal republic consisting of 50 states, a federal district, and several territories, known for its significant influence on world economics and politics.

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UN Global Compact

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