10 Questions
What are the different patterns of inventories mentioned in the text?
Raw materials, spares, stores, work-in-progress, finished goods
What is the major component of working capital for every concern?
Inventory
According to Accounting Standard 2, how should inventories be valued?
At lower of cost of inventory or net realizable value (NRV) of the inventory
How is the valuation of inventory determined as per AS-2 when dealing with finished goods or work-in-progress?
Lower of cost & NRV should be taken on item by item basis
What information is provided in the text about the value of inventory for Chemical 1 and Chemical 2 in Illustration-2?
Chemical-1: 5; Chemical-2: 6.30
What is the meaning of Inventory as per AS-2?
Inventory means asset held for sale in normal course of business.
What are the features of Inventory?
The features of Inventory include raw materials, stores, spares, supplies, work-in-progress, and finished goods.
Why is the valuation of Inventory as per AS-2 significant?
The valuation of Inventory as per AS-2 is significant because it determines the value of assets held for sale in the normal course of business, impacting the financial statements and profitability.
What are the different methods of pricing the issue of materials?
The different methods of pricing the issue of materials include FIFO (First In, First Out), LIFO (Last In, First Out), Weighted Average Cost, and Standard Cost.
What becomes the opening stock of the next accounting year?
The unsold stock of raw materials, work-in-progress, or finished goods at the end of every accounting year becomes the opening stock of the next accounting year.
Test your knowledge of Inventory Valuation Accounting Standard-2 with this quiz. Topics include meaning of inventory, features of inventory, pricing methods, valuation as per AS-2, and inventory reconciliation.
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