Multiple choice

Accounting Standard 2 by the ICAI defines inventory as

  1. asset held for sale in ordinary course of business

  2. fixed asset

  3. current asset

  4. current liability

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The definition of inventory or closing stock includes: Items which are held for sale in the normal course of business that has finished stock of goods. Work-in-progress (WIP) for such sale. Goods which are not yet finished or ready for sale. Raw material which is not even issued for production while valuation of closing stock or inventory. It also includes consumable stores items.

Keep practicing — related questions