In the reconciliation between cost and financial accounts, one of the areas of differences is different methods of stock valuation used. State with reasons, in each of the following circumstances whether costing profit will be higher or lower than the financial profit:
|
Items of stock |
Cost valuation Rs |
Financial valuation Rs |
|
|
(i) |
Raw material (opening) |
50,000 |
60000 |
|
(ii) |
Work in progress (closing) |
60,000 |
50,000 |
|
(iii) |
Finished stock (closing) |
50,000 |
60,000 |
|
(iv) |
Finished stock (opening) |
60,000 |
50,000 |