Model: Determination of profit with respect to raw materials, work-in-progress and finished goods—opening and closing level
In the reconciliation between cost and financial accounts, one of the areas of differences is for different methods of stock valuation. 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. |
|
Raw materials (opening) |
20,000 |
25,000 |
|
Raw materials (closing) |
25,000 |
20,000 |
|
Work-in-progress (opening) |
25,000 |
20,000 |
|
Work-in-progress (closing) |
20,000 |
25,000 |
|
Finished stock (opening) |
30,000 |
40,000 |
|
Finished stock (closing) |
30,000 |
40,000 |