COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lower cost
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cost or market value whichever is lower
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Neither cost nor market value
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Higher market value
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All of these
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Detailed explanation-1: -As per the conservatism principle of accounting, the closing stock is valued at cost price or at market price whichever is less.
Detailed explanation-2: -Closing stock is always valued at cost price or market price whichever is less. It is based on the principle of Conservatism.
Detailed explanation-3: -There are two types of price viz. cost price and the market price. The cost price is the price at which you procure the stock while the market price is what the stock is currently quoting at in the current market.
Detailed explanation-4: -Closing stock is always valued at market price.
Detailed explanation-5: -Market Price Method Under this method of valuation, stock is valued at current market price. It is also called replacement price or realizable price method.