A Lower Cost or Market Journal Entry is a financial accounting entry that allows companies to write off their Inventory at the lower of either the cost of the item, or the market price. This journal entry enables businesses to keep their books updated and in compliance with Generally Accepted Accounting Principles (GAAP). It’s an easy way to ensure inventory remains accurately accounted for, even if its market value has dropped since it was purchased. Plus, recognizing a decline in the cost of goods may help managers gain insight into how successful their pricing strategies are. In short, the Lower Cost or Market Journal Entry is a simple yet powerful tool that all business owners should be familiar with.