Question

According to the concept of Conservatism, the stock in trade is valued at
(a) Market price. (b) Cost price
( c) Market price or cost price whichever is higher
(d) Market price or cost price whichever is lower.

Answer 1

Answer:

Closing stock is the goods that remain unsold at the end of the year. It is valued at Cost price or Realisable Value, whichever is less.

It is based on the principle of Conservatism or prudence, According to which all anticipated losses should be recorded in the books of accounts, but all anticipated or unrealized gains should be ignored.