O-LevelAccountingAccounting principles and policies7707/12 · Oct/Nov 2022 · Q171 Mark

Why should inventory be valued at the lower of cost and net realisable value?

Ato avoid undervaluing the inventory

Bto comply with the historic cost principle

Cto comply with the principle of materiality

Dto ensure that profits are not overstated

✓ Correct answer

D: to ensure that profits are not overstated

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2022 Paper 1 Variant 2, question 17.

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