Closing stock is generally valued at______________?
Correct answer: D. Cost price or Market price whichever is lower
- A. Cost Price
- B. Market Price
- C. Cost price or Market price whichever is higher
- D. Cost price or Market price whichever is lower
Explanation
Closing inventory is traditionally valued at cost or net realisable value, whichever is lower, so that expected losses are recognised but unrealised profits are not. Among the given options, the lower figure is the applicable choice.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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