21 April 2013
If cost price of any product is 10 RS And Market price is 12 than in this case , there are no profit and no loss because cost price is less - On the other hand cost price of that product is 10 And market price is 9 Rs than in this case loss is 1 Rs per unit quantity due to apply market price. So Balance sheet always represent under tally amount or equal tally amount.I want to ask that it is right or not.
The second question posted by you is not very clear. However, the reason for taking stock value as lesser of cost or realizable value is to follow the principle of conservatism. That is recognise the loss if the same is determined but do not recognise profit unless it is realized.
CAclubindia
