Why are inventories stated at lower-of-cost-or-market? a. to report a loss when there is a decrease in the future utility. b. to keep track of the market value of the inventory. c. to report a loss when there is a decrease in the future utility below the original cost. d. to permit future profits to be recognized.

The correct answer is "c. To report a loss when there is a decrease in the future utility below the original cost."

Explanation: When talking about current assets, or more precisely, Merchandise inventory, it is common that sometimes the sale value is less than the original cost of the assets, therefore a negative holding result is produced, that is, a loss.

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