Accounting for IGCSE & O level - Final Statements (Section 11 - No. 47)
Which accounting principle is generally applied when inventory is valued at the lower of cost or net realisable value?
Matching principle
Going concern principle
Materiality principle
Prudence principle
Explication
Valuing inventory at the lower of cost or net realisable value demonstrates the application of the prudence principle by ensuring that the asset is not overstated.