How are inventories valued in partnership accounts?

Inventories are valued at the lower of cost and net realizable value (NRV) as per AS-2. During partnership reconstitution, adjustments are made through the Revaluation Account and shared in the old PSR. For dissolution, they are transferred to the Realization Account.

What is the difference between FIFO and Weighted Average Cost methods for inventory valuation?

FIFO assumes the oldest inventory items are sold first, valuing closing inventory at recent costs. Weighted Average Cost calculates an average cost for all inventory items, smoothing out price fluctuations. The choice impacts reported profit and inventory value.

Knowledge Base Foundation Paper 1 Accounting Chapter 4Partnership Accounts

References

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ICAI Study Material
MTP References
Previous Year Questions
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Inventories in Partnership Accounts: CA Foundation Accounting Guide

Kartavvya CA Expert Team

Updated on 7/9/2026

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Inventories in Partnership Accounts: CA Foundation Accounting Guide — CA Knowledge Base | Kartavvya