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After companies apply one of the four costing methods, inventory is reviewed to ensure it is reported at the:_________
After companies apply one of the four costing methods, inventory is reviewed to ensure it is reported at the:_________
Companies must review their inventory after applying costing methods to ensure it is reported at the lower of cost or net realisable value, in accordance with accounting practices to accurately represent financial health.After companies apply one of the four costing methods, inventory is reviewed to ensure it is reported at the lower of cost or net realisable value (NRV). This accounting practice is intended to present a financially conservative and accurate value of inventory on the balance sheet. If the market value of inventory falls below its cost, then inventory is written down to its net realisable value to reflect its current worth in the market.This principle, which forms part of inventory accounting rules, is crucial because it can significantly affect the reported financial health of a company. If for instance, the inventory is obsolete, out of fashion, or perishable, its NRV would likely be below the initial cost, necessitating a write-down. Such adjustments to inventory valuation can impact the overall profits and financial statements, making precision and adherence to accounting guidelines essential....