Accounting for IGCSE & O level - Final Statements (Section 12 - No. 40)
Which accounting principle is MOST closely associated with the valuation of inventory at the lower of cost or net realisable value?
Going Concern
Accruals
Prudence
Materiality
Maelezo
The principle of prudence requires that assets and revenues should not be overstated, and liabilities and expenses should not be understated. This is why we value inventory at the lower of cost or NRV.