O-LevelAccountingAccounting principles and policies7707/11 · May/June 2024 · Q181 Mark

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

Ato avoid overstating current assets and sales

Bto avoid overstating profit and current assets

Cto avoid understating current assets and sales

Dto avoid understating profit and current assets

✓ Correct answer

B: to avoid overstating profit and current assets

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2024 Paper 1 Variant 1, question 18.

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