Final answer:
The application of the lower of cost or market method is an example of the conservatism practice in accounting.
Step-by-step explanation:
The application of the lower of cost or market method is an example of the conservatism practice in accounting.
This practice requires financial statements to be prepared with a conservative outlook, meaning that potential losses should be recognized immediately, while potential gains should only be recognized when realized.
In the case of the lower of cost or market method, if the market value of an inventory item falls below its cost, the inventory is reported at the lower market value.