Question

If in a business value of stock is 10.00 lakh, value of sundry creditor is 12 lakh, value of receivable is 20 lakh then what is the drawing power assuming the margin as 25 % on stock and book debt.

Answer 1

The inventory, however, is valued on the basis of the cost of materials bought earlier in the year. During periods of inflation, the use of LIFO will result in the highest estimate of cost of goods sold among the three approaches, and the lowest net income.