Question

In trading account, closing stock is shown at -
I. Cost price
II. Net realizable price
Select the correct answer from the options given below.

• A. I only
• B. II only
• C. I or II whichever is lower
• D. I or II whichever is higher

Answer 1

The correct option is C I or II whichever is lower

Closing Stock is shown at cost price or net realizable price whichever is lower based on the principle of conservatism. According to this principle, anticipated profits should not be recorded into accounts before actual realization but anticipated losses or expenses should be recorded as soon as possible.