Question

The lower-of-cost-or-market rule can be applied to which of the following? A. Major classes or categories of inventory B. The entire stock of inventory in the aggregate C. Each individual inventory item D. All of these answer choices are correct.

Answer 1

The correct answer is letter "D": All of these answer choices are correct.

Step-by-step explanation:

The lower-of-cost-or-market rule establishes that for accounting recording purposes a company should use the lowest cost of its inventory. The choices are only two: whether recording the inventories at the purchase price of the assets or the current market value. Whichever the lowest, it must be the correct option. The rule applies to pieces of inventory alone or for entire inventories.