Question

Lower-of-cost-or-market as it applies to inventory is best described as the:
a. drop of future utility below its original cost.
b. method of determining cost of goods sold.
c. assumption to determine inventory flow.
d. change in inventory value to market value.

Answer 1

Answer:

The correct answer is A

Explanation:

Lower of market or cost rule is the one which states or describe that a business or firm need to record the inventory cost at lower, that means whichever cost or the current market price is lower.

It is the term which is best illustrated as the drop or decrease of future utility below the original or the actual cost of the inventory.