Inventory is reported in the financial statements at Group of answer choicescost.marketthe higher-of-cost-or-marketthe lower-of-cost-or-market

In accounting, inventory is reported in the financial statements using the lower of cost or market (LCM) method. This means that when valuing inventory, businesses will compare the cost of the inventory with its market value and report it at whichever is lower. This approach is consistent with the conservatism principle in accounting, which emphasizes being cautious in financial reporting to avoid overstating assets and income.

Explanation:

1. Cost: This refers to the amount paid to acquire the inventory, including all costs necessary to bring the inventory to its present location and condition for sale.

2. Market: This typically refers to the current replacement cost of the inventory, which might be lower than its cost due to market fluctuations.

3. Lower of Cost or Market: By using this method, companies ensure that their inventory is not overvalued in financial statements.

In conclusion, the correct reporting method for inventory valuation in financial statements is the lower of cost or market.