Question

Change in inventories means ______.

Options

• Opening Inventories less Closing Inventories

• Closing Inventories less Opening Inventories

• Difference between Opening Inventories and Closing Inventories, if Opening Inventories are higher

• Difference between Closing Inventories and Opening Inventories, if Closing Inventories are higher.

Answer 1

Change in inventories means opening inventories less closing inventories.

Explanation:

Change in Inventories means the difference obtained by subtracting the Closing Inventories from the Opening Inventories. It reflects whether inventory has increased or decreased during the accounting period. If the opening stock is higher than the closing stock, change in inventories is positive, indicating inventory consumption. Conversely, if closing stock is higher, the change is negative, indicating inventory accumulation.