what-is-the-primary-purpose-of-the-lower-of-cost-or-market-rule

Question

What is the primary purpose of the 'lower of cost or market' rule?

Accepted Answer

To ensure inventory is valued at the lowest possible amount

Answer

To ensure inventory is valued at the average of cost and market

Answer

To ensure inventory is valued at the highest possible amount

Answer

To ensure inventory is valued at historical cost only