Which of the following statements regarding the lower of cost or market (LCM) rule is true?

a. The LCM rule is an application of the historical cost principle.

b. If a company uses the LCM rule, there is no need to use a cost flow assumption such as FIFO, LIFO, or average cost.

c. When the market value of inventory is above the historical cost of inventory, an adjustment is made to increase inventory to its market value and increase income.

d. When the replacement cost of inventory drops below the historical cost of inventory, an adjustment is made to decrease inventory to its market value and decrease income.