The concept of conservatism has been a strong foundation for CFO's and CPA's in business. Standard practice is for businesses is to reflect inventory values at the lower of cost or market value. This practice may have a business recognize a loss on inventory if the market value declines below what was paid for it, but yet not recognize a gain if the market price raises above what was originally paid. Discuss the argument for this practice from a financial management viewpoint.

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Yes we show inventory value in the financial statements of lower cost or ... View the full answer