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Rachael McCoy
on Nov 14, 2024

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The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

A) valued at their current cost.
B) valued at their selling price.
C) not under-valued.
D) not over-valued.

Lower Of Cost

Refers to a valuation principle that directs inventory and other assets to be recorded at the lower of either the original cost or the current market value.

Net Realizable Value

The estimated selling price of inventory in the ordinary course of business minus any estimated costs necessary to make the sale, used in determining the value of ending inventory.

Inventories

The total amount of goods and materials held by a company for the purpose of resale or production.

  • Apply the concept of the lower of cost or net realizable value for inventory valuation.
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Verena ZhangNov 19, 2024
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