Question

Closing stock is valued at cost price or market price whichever is less.

• A. True
• B. False

Answer 1

The correct option is A True

Closing stock is the number of goods left at the end of accounting year. When closing stock is valued the market price and the cost price of closing stock is considered. Cost price is that price at which originally the goods were purchased and market price is that price which is prevailing right now in the market. Every firm compares both the prices and values closing stock with that price which is least amongst the two. This is because of principle of conservatism.

Thus, the statement is true.