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Indian Accounting Standard 2: Inventories

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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?

Techniques for measurement of cost of inventories Signup and view all the answers

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

FIFO, LIFO, and specific identification method Signup and view all the answers

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

Inventories held by producers of agricultural and forest products Signup and view all the answers

What are considered as inventories according to the standard?

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

What does the Standard specifically exclude from its measurement requirements?

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

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

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

What do commodity broker-traders principally acquire inventories for?

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