What is LCM in Accounting?

In accounting, LCM refers to the Lower of Cost or Market principle. It involves valuing inventory or assets at the lower of their cost or market value. This principle ensures that inventory is not overstated on the balance sheet, taking conservative approach to asset valuation by adjusting values downward when market value is lower than recorded cost. LCM helps in maintaining accuracy in financial reporting and ensures that assets are reflected at a realistic values in the accounting records.

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