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Under the conservatism (prudence) principle, inventory is valued at:

  1. A Cost
  2. B Net realisable value
  3. C The lower of cost and net realisable value
  4. D Selling price
Answer

The lower of cost and net realisable value

Prudence prevents overstating assets and profits. Losses are anticipated but gains are not recognised until realised.

All Accounting MCQs

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