Bulletin HASKINS & SELLS 99
Cost or
AMONG the expressions which fall
glibly from the tongues of those who
know, those who think they know, and
those who have no idea as to the meaning
of the phrase, is the one "cost or market,
whichever is lower."
The phrase did not originate with the
Treasury Department. It has been in
use among accountants for many years.
But the Treasury Department has, in
connection with taxes, been the cause of
its increased use.
The phrase has its application chiefly
Market
to inventories. It is scarcely ever applied
to securities although the same
principle holds in connection therewith.
Inventories are of course of various kinds.
It is therefore important that an expression
like "cost or market" should not be used
carelessly or indiscriminately.
The goods of a trading concern should,
for inventory purposes, be priced at cost
unless in the market, at the date of the
inventory, the goods may be replaced at a
cost which is lower than that at which
they were originally acquired. Such is the
