lower-of-cost-or-market method

简明释义

成本或市价按较低者为准计算法

英英释义

例句

1.When evaluating inventory, the accountant recommended the use of the lower-of-cost-or-market method for accurate reporting.

在评估库存时，会计建议使用成本或市场较低法以确保报告的准确性。

2.The lower-of-cost-or-market method is particularly important for businesses dealing with perishable goods.

对于处理易腐商品的企业来说，成本或市场较低法尤为重要。

3.In times of market decline, businesses often rely on the lower-of-cost-or-market method to adjust their financial statements.

在市场下滑时，企业通常依赖成本或市场较低法来调整其财务报表。

4.The company applies the lower-of-cost-or-market method to ensure that its inventory is not overstated.

该公司采用成本或市场较低法以确保其库存不会被高估。

5.Using the lower-of-cost-or-market method can help prevent significant losses in asset valuation.

使用成本或市场较低法可以帮助防止资产估值的重大损失。

作文

The lower-of-cost-or-market method is a fundamental accounting principle that plays a crucial role in inventory valuation. This method is used to ensure that the value of inventory is not overstated on the balance sheet. Essentially, it requires companies to assess their inventory at either its historical cost or its current market value, whichever is lower. This approach is designed to provide a more accurate representation of a company's financial position and to adhere to the conservatism principle in accounting.To understand the lower-of-cost-or-market method, it is essential first to grasp the concepts of cost and market value. The cost of inventory includes all expenses incurred to bring the inventory to its present location and condition, such as purchase price, shipping costs, and handling fees. On the other hand, market value refers to the current replacement cost of the inventory, which is the amount that a company would have to pay to replace the inventory in the current market.One of the primary reasons for using the lower-of-cost-or-market method is to avoid overestimating the assets on the balance sheet. For instance, if a company has purchased goods at a high price but the market value has significantly dropped due to various factors such as changes in consumer demand or technological advancements, the company must adjust the value of its inventory accordingly. By doing so, it prevents misleading stakeholders about the company’s financial health.Moreover, the lower-of-cost-or-market method helps in recognizing losses in inventory value promptly. This is particularly important for businesses that deal with perishable goods or items subject to rapid obsolescence. For example, a grocery store that sells fresh produce must regularly evaluate its inventory to ensure that it reflects the current market conditions. If the market value of certain products falls below their cost, the store must write down the inventory to reflect this loss. This adjustment affects the income statement, where the loss is recognized as an expense, ultimately impacting net income.The application of the lower-of-cost-or-market method can vary depending on the industry and the specific circumstances of the business. Some companies may use this method on a total inventory basis, while others might apply it to individual items or categories of inventory. Regardless of the approach taken, the underlying principle remains the same: to report the inventory at the lower of its cost or market value.In conclusion, the lower-of-cost-or-market method is an essential tool for accurate inventory valuation and financial reporting. By ensuring that inventory is reported at the lower of cost or market value, companies can provide a clearer picture of their financial status, adhere to accounting principles, and make informed business decisions. Understanding and applying this method is vital for accountants, financial analysts, and business owners alike, as it directly influences the transparency and reliability of financial statements.

“成本与市场较低者法”是一个基本的会计原则，在库存估值中起着至关重要的作用。该方法用于确保资产负债表上的库存价值不会被高估。基本上，它要求公司根据其历史成本或当前市场价值进行评估，以较低者为准。这种方法旨在提供更准确的公司财务状况表现，并遵循会计中的保守原则。要理解“成本与市场较低者法”，首先必须掌握成本和市场价值的概念。库存的成本包括将库存带到其当前地点和状态所产生的所有费用，例如购买价格、运输费用和处理费用。另一方面，市场价值是指库存的当前替代成本，即公司在当前市场中更换库存所需支付的金额。使用“成本与市场较低者法”的主要原因之一是避免在资产负债表上高估资产。例如，如果一家公司以高价购买商品，但由于消费者需求变化或技术进步等各种因素，市场价值大幅下跌，公司必须相应调整其库存价值。通过这样做，可以防止误导利益相关者对公司财务健康状况的判断。此外，“成本与市场较低者法”有助于及时识别库存价值的损失。这对于处理易腐烂商品或快速过时物品的企业尤为重要。例如，销售新鲜农产品的杂货店必须定期评估其库存，以确保其反映当前市场条件。如果某些产品的市场价值低于其成本，商店必须将库存写低以反映这一损失。这一调整影响利润表，其中损失被确认为费用，最终影响净收入。“成本与市场较低者法”的应用可能因行业和企业的具体情况而异。一些公司可能在整体库存基础上使用此方法，而其他公司可能将其应用于单个项目或库存类别。无论采取何种方法，基本原则保持不变：以成本或市场价值较低者报告库存。总之，“成本与市场较低者法”是准确库存估值和财务报告的重要工具。通过确保库存以成本或市场价值较低者报告，公司可以提供更清晰的财务状况，遵循会计原则，并做出明智的商业决策。理解和应用这一方法对于会计师、财务分析师和企业主来说至关重要，因为它直接影响财务报表的透明度和可靠性。