Multiple choice

Which of the following will not form part of cost of inventory as per AS - 2?

  1. Cost of purchase

  2. Cost of conversion

  3. Cost of bringing inventory to the present position

  4. Selling and distribution overheads
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

AS-2 excludes selling and distribution overheads from inventory cost because these occur after production is complete. Only costs incurred to bring inventory to present location and condition (purchase + conversion) are included.

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