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CA Foundation · Accounting · Inventories

Which of the following must be disclosed in the financial statements under AS 2 (Valuation of Inventories)?

AS 2 requires an enterprise to disclose the accounting policies used to measure inventories, including the cost formula adopted such as FIFO or weighted average. It also requires disclosure of the carrying amount in classifications. Supplier names, item-wise selling prices and warehouse splits are not AS 2 disclosures.

  1. AThe accounting policies adopted in measuring inventories, including the cost formula usedCorrect
  2. BThe names of the suppliers from whom inventories were purchased
  3. CThe expected selling price of every item of closing inventory
  4. DThe percentage of inventories held at each warehouse location

Explanation

AS 2 requires disclosure of the accounting policies adopted in measuring inventories, including the cost formula used, and the total carrying amount classified appropriately (e.g., raw materials, WIP, finished goods). Supplier names, item-wise selling prices and warehouse percentages are not required by AS 2.

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