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CA Foundation · Accounting · Inventories

Under AS 2 (Valuation of Inventories), which of the following items is NOT within the scope of the Standard, so that it is not valued under AS 2?

Shares, debentures and other financial instruments held as stock-in-trade are outside the scope of AS 2. The Standard covers finished goods, ordinary work in progress, raw materials and consumable stores, but it specifically excludes financial instruments held as stock-in-trade from its valuation rules.

  1. AFinished goods held for sale in the ordinary course of business
  2. BWork in progress of a manufacturing firm
  3. CStores and spares consumed in the production process
  4. DShares, debentures and other financial instruments held as stock-in-tradeCorrect

Explanation

AS 2 excludes work in progress arising under construction contracts, work in progress of service providers, shares, debentures and other financial instruments held as stock-in-trade, and producers' inventories of livestock, agricultural and forest products, and minerals measured at net realisable value. Finished goods, ordinary work in progress and stores consumed in production are all inventories covered by AS 2.

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