GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost price
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Market price
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Cost price of market price whichever is less
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Depends whether LIFO method is used or FIFO method is used
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Detailed explanation-1: -The book value of a stock is theoretically the amount of money that would be paid to shareholders if the company was liquidated and paid off all of its liabilities. As a result, the book value equals the difference between a company’s total assets and total liabilities.
Detailed explanation-2: -The Last-In, First-Out (LIFO) method assumes that the last unit to arrive in inventory or more recent is sold first. The First-In, First-Out (FIFO) method assumes that the oldest unit of inventory is the sold first.
Detailed explanation-3: -First-in, first-out (FIFO) method The ending inventory value derived from the FIFO method shows the product’s current price based on the most recent item purchased. This method of calculating ending inventory is formed from the belief that companies sell their oldest items first to keep the newest items in stock.
Detailed explanation-4: -The difference between LIFO and FIFO in inventory valuation is that FIFO values the latest purchased stock while LIFO values the older stock. This means the value of the stock and the tax calculation for it works differently in an inflation market vs a deflationary market.