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Cost Concept

The Historica...

Question

The Historical cost or cost principle is not applicable to which of the following assets:

A

Inventory i.e. stocks of business

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B

Land purchased for business

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C

Machinery purchased for business

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D

Building in which machine is kept.

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Solution

The correct option is A
Inventory i.e. stocks of business

Cost Principle or Historical Cost Concept, is not applicable to Inventories which are valued at cost or market value whichever is lower.

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