Question

Why is closing stock valued at cost price or realisable value whichever is lower?

Answer 1

Net realisable value means the price at which stock can be sold in the market less any selling expenses. For example goods were bought at the rate of Rs.50 per unit. The market price of this is Rs.48 and a commission of Rs.2 is payable to the broker. The net realisable value in this case would be Rs.48-Rs.2 = Rs.46.

Stock is always value at cost or net realisable value whichever is lower. (This is in accordance with Principle of Conservatism or Prudence).

Goods withdrawn by the proprietor are always valued at cost price. They are never valued at selling price because one cannot make profit from oneself.

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Answer 2

Answer:

materiality

Explanation:

i don't know