Indian Accounting Standard 2: Inventories
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Questions and Answers

What is the objective of Indian Accounting Standard 2?

  • To determine the fair value of inventories
  • To provide guidance for determining the cost of inventories (correct)
  • To prescribe the accounting treatment for assets
  • To guide the recognition of financial instruments

    • Which terms are defined in Indian Accounting Standard 2?

  • Amortization, net realisable value, and cost
  • Inventories, net realisable value, and cost formulas (correct)
  • Net realisable value, depreciation, and fair value
  • Fair value, recognition, and disclosure

    • To which inventories does Indian Accounting Standard 2 apply?

  • Inventories related to financial instruments only
  • Only perishable inventories
  • Inventories related to agriculture only
  • All inventories except financial instruments and agriculture (correct)

    • What does Indian Accounting Standard 2 provide guidance on?

    <p>Techniques for measurement of cost of inventories</p> Signup and view all the answers

    What are the acceptable methods of determining cost as outlined in the text?

    <p>FIFO, LIFO, and specific identification method</p> Signup and view all the answers

    According to the Standard, which of the following is not applicable to inventories?

    <p>Inventories held by producers of agricultural and forest products</p> Signup and view all the answers

    What are considered as inventories according to the standard?

    <p>Goods purchased, goods in the process of production, and materials or supplies to be consumed in the production process or services</p> Signup and view all the answers

    What does the Standard specifically exclude from its measurement requirements?

    <p>Inventories of commodity broker-traders measured at fair value less costs to sell</p> Signup and view all the answers

    What are examples of biological assets that are excluded from the scope of this Standard?

    <p>Living animals or plants related to agricultural activity and agricultural produce at the point of harvest</p> Signup and view all the answers

    What do commodity broker-traders principally acquire inventories for?

    <p>To generate a profit from price fluctuations in the near future</p> Signup and view all the answers

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