Question

State with reasons whether the following statement is true or false:
Finished goods are normally valued at cost or market price, whichever is lower.

• A. True
• B. False

Answer 1

The correct option is A True

True.

Stock is always value at cost or net realisable value whichever is lower. (This is in accordance with Principle of Conservatism or Prudence). Goods withdrawn by the proprietor are always valued at cost price. They are never valued at selling price because one cannot make profit from oneself.