Multiple choice

At the end of the accounting year, material A costing Rs. 10,000 was having net realisable value of Rs. 9,500 only, while material B costing Rs. 12,000 was having a net realisable value of Rs. 13,000 in the market and material C costing Rs. 15,000 was having net realisable value of Rs. 14,000 only. The total amount of closing stock will be

  1. Rs. 37,000

  2. Rs. 35,500

  3. Rs. 36,500

  4. Rs. 38,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Inventory is valued at lower of cost or net realizable value (NRV) per the prudence concept. Material A: Cost Rs. 10,000, NRV Rs. 9,500 → Value at Rs. 9,500. Material B: Cost Rs. 12,000, NRV Rs. 13,000 → Value at Rs. 12,000 (cost is lower). Material C: Cost Rs. 15,000, NRV Rs. 14,000 → Value at Rs. 14,000. Total = Rs. 9,500 + Rs. 12,000 + Rs. 14,000 = Rs. 35,500. Each item is valued separately, not at aggregate level.

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