Inventory Valuation Accounting Standard-2 Quiz

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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 Signup and view all the answers

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 Signup and view all the answers

What is the meaning of Inventory as per AS-2?

Inventory means asset held for sale in normal course of business. Signup and view all the answers

What are the features of Inventory?

The features of Inventory include raw materials, stores, spares, supplies, work-in-progress, and finished goods. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

What are the different types of inventory?

Raw materials, spares, stores, work-in-progress, and finished goods are all types of inventory.

What is the main component of working capital?

Inventory is the most important part of working capital for any business.

How is inventory valued under AS-2?

According to Accounting Standard 2 (AS-2), inventory should be valued at the lower of its cost or its net realizable value (NRV).

How is inventory valued for finished goods and work-in-progress?

The lower of cost and NRV is determined separately for each item of finished goods or work-in-progress.