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Cambridge IGCSE Accounting practice

What does the lower of cost or net realizable value method ensure?

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Topic

Valuation of inventory

Exam-style question

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What does the lower of cost or net realizable value method ensure?.

  1. A.Inventory is valued at historical cost only
  2. B.Inventory is valued at the higher of cost or NRV
  3. C.Inventory is not overstated on the balance sheet
  4. D.Inventory is always valued at market price

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Paper 2 structured question: Valuation of inventory

Paper 2Structured Written Paper1 marks

Description

Inventory Valuation

Determine the value of the inventory using the lower of cost or net realizable value method.

  1. a

    Calculate the value of the inventory.

    Aim for approximately 1 distinct marking point.

    [1]