CA Inter P1 · Chapter 3 · Question 3 of 16
Which of the following costs is included in the cost of inventories under AS 2?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Freight inward incurred to bring raw materials to the factory
Explanation
Cost of purchase includes freight inward and other costs directly attributable to bringing materials to their present location and condition. AS 2 specifically excludes abnormal wastage, selling costs, and storage costs (unless storage is necessary in the production process before a further stage).
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