Question

Work-in-progress is generally valued at

• A. Market price
• B. Cost price
• C. Selling price
• D. Cost price or market price which ever is less

Answer 1

Answer:

D. Cost price or market price which ever is less

Work-in-progress (WIP) refers to partially completed goods in a manufacturing process. Accounting principle for valuation of WIP: Conservative / Lower of Cost or Market (Net Realizable Value). Cost price: Expenses incurred so far in producing the goods. Market price / Net realizable value: Estimated selling price minus completion and selling costs. This ensures that assets are not overstated in the financial statements. Other options: Market price: Could overstate WIP. Cost price: Ignores possible fall in realizable value. Selling price: Not used for valuation in accounts.