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 provide guidance on financial reporting
  • To recognize inventories as assets
  • To prescribe the accounting treatment for inventories (correct)
  • To determine the net realisable value of inventories

    • Which term is defined in Indian Accounting Standard 2?

  • Inventories (correct)
  • Net realisable value
  • Inventory cost
  • Fair value

    • What does Indian Accounting Standard 2 provide guidance on?

  • Determining the inventory cost (correct)
  • Recognition of intangible assets
  • Measurement of goodwill
  • Valuation of financial instruments

    • To which inventories does Indian Accounting Standard 2 apply?

    <p>All inventories except financial instruments and agriculture</p> Signup and view all the answers

    What is the scope of Indian Accounting Standard 2?

    <ul> <li>Applies to all inventories except Ind AS 32 &amp; 109 Financial Instruments and Ind AS 41 Agriculture</li> </ul> Signup and view all the answers

    What does Indian Accounting Standard 2 provide guidance on?

    <p>Determination of cost and subsequent recognition as an expense for inventories</p> Signup and view all the answers

    Which term is defined in Indian Accounting Standard 2?

    <p>Net realisable value</p> Signup and view all the answers

    To which inventories does Indian Accounting Standard 2 apply?

    <p>All inventories except financial instruments and agricultural assets</p> Signup and view all the answers

    What is the objective of Indian Accounting Standard 2?

    <p>To prescribe the accounting treatment for inventories</p> Signup and view all the answers

    What does Indian Accounting Standard 2 provide guidance for?

    <p>$Determination$ $of$ $the$ $cost$ $of$ $inventories$ $and$ $subsequent$ $recognition$ $as$ $an$ $expense$</p> Signup and view all the answers

    Study Notes

    Objective of Indian Accounting Standard 2

    • Aims to prescribe the accounting treatment for inventory.
    • Ensures that inventories are measured at the lower of cost and net realizable value.

    Definition of Terms

    • Defines "Inventories" which includes assets held for sale, in production, or in the process of production for sale.

    Guidance Provided

    • Offers guidance on the determination of cost for various inventory categories.
    • Details the methods of allocating cost to inventory and its subsequent recognition as an expense.
    • Includes guidance on the assessment of net realizable value.

    Applicability to Inventories

    • Applies to all inventories except those measured at fair value less costs to sell.
    • Excludes inventories held by producers of agricultural and forest products, minerals, and livestock.

    Scope of Indian Accounting Standard 2

    • Covers all types of inventories held for resale, production, or consumption.
    • Relevant to businesses engaging in manufacturing, retail, and other sectors that hold stock.

    Additional Guidance

    • Suggests appropriate cost formulas (e.g., FIFO, weighted average) for inventory valuation.
    • Addresses the need for periodic reviews of inventory to identify obsolete or slow-moving items.

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    Description

    Test your knowledge on Indian Accounting Standard 2: Inventories with this quiz. Learn about the objective, scope, terms, and valuation methods related to inventories in financial statements.

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