Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)? I. Firms have the option whether to apply this accounting method. II. Firms can reduce the cost of inventory but not increase it. III. If the NRV is lower, the entry recorded reduces total assets.

Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)? I. Firms have the option whether to apply this accounting method. II. Firms can reduce the cost of inventory but not increase it. III. If the NRV is lower, the entry recorded reduces total assets.

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Description: Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)?I. Firms have the option whether to apply this accounting method.II. Firms can reduce the cost of inventory but not increase it.III. If the NRV is low

Principles of Accounting Volume 1

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ISBN:9781947172685

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Publisher:OpenStax

Chapter2: Introduction To Financial Statements

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Problem 12MC: Which of the following is not an element of the financial statements? A. future potential sales...

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)?

I. Firms have the option whether to apply this accounting method.

II. Firms can reduce the cost of inventory but not increase it.

III. If the NRV is lower, the entry recorded reduces total assets.

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