Question

It is given that the cost of stock is Rs. $100$. However, its market price is Rs. $98$ (buying) and Rs. $140$ (selling). If the market price is interpreted as the selling price, then the stock should be valued at _______________.

• A. market price buying
• B. market price selling
• C. cost price
• D. average market price

Answer 1

Answer: (C)

cost price

As per Conservatism Concept, Stock is valued at cost or market price whichever is lower.

Here, Cost is 100 and market price is 140.

Therefore, the stock should be valued at 100 i.e., cost