Chapter 9

Valuation of Inventories

Inventories such as raw materials and finished goods in general, and in manufacturing companies in particular, constitute the second largest item after fixed assets. Therefore, they require a fair valuation so that the financial statements fairly portray the performance and financial position of the business.


This chapter seeks to enable you to develop knowledge and understanding of:

  1. Meaning and significance of inventories.

  2. Scope and coverage of AS-2 on ‘Valuation of Inventories’

  3. Principles and norms of standard accounting treatment of inventories, methods of inventory H valuation and ...

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