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While making P & L of a business which is dealing in merchandising business, we form P & L like this:
Opening stock + Purchases + Carriage In – Closing Stock.
My question is that while computing closing stock we have to just take the value of closing inventory only or we have to take the closing stock inventory value plus the amount of transportation related to closing stock as well in Closing stock ?
Yes – the closing inventory (we do not call it stock any more) is valued at the cost including the carriage inwards (unless, of course, the net realisable value is lower).