How are inventories valued according to AS-2?

Inventories are valued at the lower of cost and Net Realizable Value (NRV). This principle ensures that assets are not overstated.

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

FIFO assumes the first items purchased are the first sold, valuing closing inventory at recent costs. Weighted Average Cost calculates an average cost for all units, smoothing out price fluctuations.

Knowledge Base Foundation Paper 1 Accounting Chapter 4Valuation of Inventories

References

Chapter Source Notes
ICAI BOS
ICAI Study Material
MTP References
Previous Year Questions
RTP References

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Valuation of Inventories for CA Foundation: A Comprehensive Guide (AS-2)

Kartavvya CA Expert Team

Updated on 7/9/2026

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Valuation of Inventories for CA Foundation: A Comprehensive Guide (AS-2) — CA Knowledge Base | Kartavvya