Podcast
Questions and Answers
What is the objective of Indian Accounting Standard 2?
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?
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?
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?
To which inventories does Indian Accounting Standard 2 apply?
What is the scope of Indian Accounting Standard 2?
What is the scope of Indian Accounting Standard 2?
What does Indian Accounting Standard 2 provide guidance on?
What does Indian Accounting Standard 2 provide guidance on?
Which term is defined in Indian Accounting Standard 2?
Which term is defined in Indian Accounting Standard 2?
To which inventories does Indian Accounting Standard 2 apply?
To which inventories does Indian Accounting Standard 2 apply?
What is the objective of Indian Accounting Standard 2?
What is the objective of Indian Accounting Standard 2?
What does Indian Accounting Standard 2 provide guidance for?
What does Indian Accounting Standard 2 provide guidance for?
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.
