AS 2: Valuation of Inventories

AFM Definition, Scope & Accounting Standards including Ind AS Free JAIIB Capsule 48 views Updated
Capsule FREE
AFM · Definition, Scope & Accounting Standards including Ind AS
According to AS 2, how should inventories be valued in the financial statements, and which cost formulas are permitted?
Tap to flip and reveal the answer
Inventories must be valued at the lower of cost or net realisable value. FIFO and Weighted Average Cost methods are permitted.
AS 2 does not apply to work in progress under construction contracts, service providers, or shares/debentures held as stock-in-trade.
48 views

AS 2: Valuation of Inventories — Full Text

According to AS 2, how should inventories be valued in the financial statements, and which cost formulas are permitted?

Answer

Inventories must be valued at the lower of cost or net realisable value. FIFO and Weighted Average Cost methods are permitted.

Additional notes

AS 2 does not apply to work in progress under construction contracts, service providers, or shares/debentures held as stock-in-trade.

Part of Accounting & Financial Management for Bankers · Definition, Scope & Accounting Standards including Ind AS · Last updated

Comments (0)

Login to post a comment.

No comments yet. Start the discussion!

Related JAIIB AFM Capsules

Capsule PRO
When an organization runs a specific safety drive or a middle-management training course, what type of budget is used?
Programme Budgeting. It is prepared for a specific activity or program, detailing targets, revenues, and expenditures for that event only.
Capsule PRO
What is the composition and primary role of the Budget Committee in a large firm?
Composed of representatives from various departments, it coordinates, finalizes, and assumes overall responsibility for the master budget.
Capsule PRO
In the context of implementing budgetary control, what constitutes a 'Budget Centre'?
It is a specific section of the organization with clearly defined functions, for which a separate budget is prepared and controlled.
Capsule FREE
What is the most widely accepted definition of Accounting given by the American Institute of Certified Public Accountants (AICPA)?
It is the art of recording, classifying and summarising in a significant manner and in terms of money, transactions of a financial character.
Capsule PRO
What is the purpose of the 'Budget Manual' distributed within a company?
It is a rulebook detailing instructions, guidelines, responsibilities, and timelines for preparing and using budgets across the organization.
Capsule PRO
How does a financial budget conceptually differ from a simple financial forecast?
A forecast is an assessment of probable future events. A budget is a planned operating and financial goal that implies commitment to achieve it.
App Icon
Install ClearShorts App
Study offline, anytime