The practice of valuation of inventory ‘at cost or market price, whichever is lower’ is an example of:

The correct answer is C. Conservatism Concept.

The conservatism concept is a principle of accounting that states that assets and income should be conservatively reported, while liabilities and expenses should be conservatively reported. This means that assets should be recorded at their lower of cost or market value, and income should be recorded only when it is realized.

The practice of valuation of inventory ‘at cost or market price, whichever is lower’ is an example of the conservatism concept. This is because it allows companies to record their inventory at the lower of its cost or its market value, which is the more conservative approach.

The other options are incorrect.

• The cost concept is a principle of accounting that states that assets should be recorded at their historical cost. This means that the cost of an asset should be recorded when it is acquired, and should not be adjusted for changes in its value over time.
• The consistency concept is a principle of accounting that states that companies should use the same accounting methods from period to period. This allows for comparability of financial statements across different periods.
• The realization concept is a principle of accounting that states that revenue should be recognized when it is realized or realizable. This means that revenue should be recorded when it is earned, and not before.