asked 127k views
2 votes
What two types of companies is the lower of cost or market rule especially important for?

asked
User Koitt
by
7.6k points

1 Answer

7 votes

Final answer:

The lower of cost or market rule is especially important for companies that deal with perishable goods and fast-changing technology products.

Step-by-step explanation:

The lower of cost or market rule is particularly important for two types of companies: those that deal with perishable goods and those that deal with inventory that becomes outdated or obsolete quickly. Perishable goods, such as food items, have a limited lifespan and their market value can decrease rapidly. For example, if a grocery store has a surplus of strawberries nearing their expiration date, the market value of those strawberries may be lower than their cost. Similarly, companies that deal with fast-changing technology products, such as electronics, need to regularly assess the market value of their inventory to prevent losses from outdated or obsolete items.

answered
User Kamesh Jungi
by
8.5k points

No related questions found

Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.