what-does-the-lower-of-cost-or-market-rule-ensure-in-inventory-valuation

Question

What does the 'lower of cost or market' rule ensure in inventory valuation?

Accepted Answer

Inventory is not overstated on the balance sheet.

Answer

Inventory is always valued at its highest possible value.

Answer

Inventory is valued at replacement cost only.

Answer

Inventory is valued at historical cost only.