The idea that stock should be included in accounts at the lower of historical cost and net
Question:
‘The idea that stock should be included in accounts at the lower of historical cost and net realisable value follows the prudence convention but not the consistency convention.’
Required:
(a) Do you agree with the quotation?
(b) Explain, with reasons, whether you think this idea (that stocks should be included in accounts at the lower of historical cost and net realisable value) is a useful one. Refer to at least two classes of user of financial accounting reports in your answer.
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Related Book For
Frank Woods Business Accounting Volume 1
ISBN: 9780273681496
10th Edition
Authors: Frank Wood, Alan Sangster
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