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Question

Which of the following is not a standard method of inventory valuation?

A
First in First out
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B
Standard Cost
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C
Average Pricing
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D
Realizable Value
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Solution

The correct option is D Realizable Value

The three valuation methods are (1) LIFO (2) FIFO (3)Weighted Average. (use of ACTUAL costs)

Standard cost is used as an alternative to cost layering systems such as LIFO and FIFO (uses ESTIMATED cost)

Inventories should be measured at the lower of cost or net realizable value (NRV). NRV is only a floor/ceiling to be considered in valuing and revaluing inventories.


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