lower of cost or net realizable value concept

简明释义

成本与可变现净值孰低

英英释义

例句

1.Understanding the lower of cost or net realizable value concept is crucial for accurate financial reporting.

理解成本与可变现净值孰低原则对于准确的财务报告至关重要。

2.During the year-end audit, the auditor checked if the company followed the lower of cost or net realizable value concept for its assets.

在年终审计中，审计师检查公司是否遵循成本与可变现净值孰低原则来评估其资产。

3.When valuing their stock, the retailer used the lower of cost or net realizable value concept to determine the write-downs necessary.

在评估库存时，零售商使用了成本与可变现净值孰低原则来确定必要的减记。

4.The accountant applied the lower of cost or net realizable value concept to ensure that the inventory was not overstated.

会计师应用了成本与可变现净值孰低原则，以确保库存没有被高估。

5.The lower of cost or net realizable value concept helps businesses avoid reporting inflated asset values.

成本与可变现净值孰低原则帮助企业避免报告虚高的资产价值。

作文

The concept of the lower of cost or net realizable value concept is a fundamental principle in accounting that helps businesses determine the value of their inventory. This principle ensures that assets are not overstated on the balance sheet, reflecting a more accurate financial position of the company. To understand this concept better, we need to break down its components: 'cost' and 'net realizable value'.Cost refers to the amount that a company has spent to acquire an asset, which includes all expenses necessary to bring the asset to its current condition and location for sale. For instance, if a company purchases a batch of goods for $10,000, that amount represents the cost of those goods. However, as market conditions change, the actual selling price of those goods may fluctuate.On the other hand, net realizable value (NRV) is the estimated selling price of an asset in the ordinary course of business minus any costs expected to incur to make the sale. For example, if the same batch of goods can only be sold for $8,000 due to market saturation, and it will cost $1,000 to sell them, the net realizable value would be $7,000 ($8,000 - $1,000). The lower of cost or net realizable value concept comes into play when a company must decide how to report its inventory. According to this principle, if the cost of the inventory exceeds its net realizable value, the company must write down the inventory to its NRV. This adjustment reflects a loss in value, ensuring that the financial statements do not present an overly optimistic view of the company’s assets. This concept is particularly important during economic downturns when the market value of goods may decline. For instance, if a retailer has inventory that originally cost $15,000 but can only be sold for $10,000 after accounting for selling costs, the lower of cost or net realizable value concept dictates that the inventory should be reported at $10,000 rather than the original cost. This practice not only adheres to accounting standards but also provides stakeholders with a realistic perspective on the company’s financial health.Moreover, applying the lower of cost or net realizable value concept consistently helps businesses avoid potential issues with overvaluation of assets. It promotes transparency and accountability, which are essential for maintaining investor confidence and ensuring compliance with financial regulations. In summary, the lower of cost or net realizable value concept is crucial for accurate financial reporting. It protects the integrity of financial statements by ensuring that inventory is valued realistically. By adhering to this principle, companies can provide a true reflection of their financial position, ultimately leading to better decision-making and strategic planning. Understanding this concept is vital for anyone involved in accounting or finance, as it underpins many of the decisions made regarding asset valuation and inventory management.

“成本与可变现净值孰低原则”是会计中的一个基本原则，帮助企业确定其库存的价值。该原则确保资产在资产负债表上不会被高估，从而反映出公司更准确的财务状况。为了更好地理解这一概念，我们需要拆分其组成部分：“成本”和“可变现净值”。成本是指公司为获得资产而支出的金额，包括使资产处于可以销售的当前状态和位置所需的所有费用。例如，如果一家公司以10,000美元购买一批商品，那么该金额就代表了这些商品的成本。然而，随着市场条件的变化，这些商品的实际售价可能会波动。另一方面，可变现净值（NRV）是指资产在正常业务过程中预计的售价减去预计发生的销售成本。例如，如果同一批商品由于市场饱和只能以8,000美元出售，并且需要1,000美元的销售成本，则可变现净值为7,000美元（8,000美元 - 1,000美元）。“成本与可变现净值孰低原则”在公司必须决定如何报告其库存时发挥作用。根据这一原则，如果库存的成本超过其可变现净值，公司必须将库存的价值调整为其NRV。这一调整反映了价值的损失，确保财务报表不会呈现出过于乐观的资产视图。这一概念在经济衰退期间尤为重要，因为商品的市场价值可能会下降。例如，如果一家零售商的库存原本成本为15,000美元，但在考虑销售成本后只能以10,000美元出售，那么“成本与可变现净值孰低原则”要求库存应以10,000美元报告，而不是原始成本。这一做法不仅符合会计标准，也为利益相关者提供了公司财务健康状况的现实视角。此外，一致地应用“成本与可变现净值孰低原则”有助于企业避免资产高估的潜在问题。它促进透明度和问责制，这对于维护投资者信心和确保遵守财务法规至关重要。总之，“成本与可变现净值孰低原则”对于准确的财务报告至关重要。它通过确保库存以现实的价值进行评估，保护财务报表的完整性。通过遵循这一原则，公司可以提供其财务状况的真实反映，最终导致更好的决策和战略规划。理解这一概念对任何参与会计或财务工作的人来说都是至关重要的，因为它支撑着关于资产评估和库存管理的许多决策。