Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The lower of cost or market rule is an example of thehistorical cost principle.(ii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, net income is reduced.(iii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, total assets are reduced.a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Which of the following regarding the lower of cost or
market rule for inventory are true?
(i) The lower of cost or market rule is an example of the
historical cost principle.
(ii) When the market value of inventory drops below
the original cost of inventory shown in the financial
records, net income is reduced.
(iii) When the market value of inventory drops below
the original cost of inventory shown in the financial
records, total assets are reduced.
a. (i) only c. (ii) and (iii)
b. (ii) only d. All of the above

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