Answer to Question #216403 in Other for qianhe

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.

Answer 1

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