If the value of a firm's inventories is higher at the end of a year than at the beginning of the year, its inventories are said to have:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → accumulated
Inventory is a stock. When its value is higher at the end of the year than at the start, inventories have accumulated; when lower, they have decumulated.
NCERT (2026-27): “2.2.1 The Product or Value Added Method … Also, let us remember that a firm buys raw materials from other firms. The part of raw material which gets used up is categorised as an intermediate good. What happens to the part which does not get used up? In economics, the stock of unsold finished goods, or semi-finished goods, or raw materials which a firm carries from one year to the next is called inventory. Inventory is a stock variable. It may have a value at the beginning of the year; it may have a higher value at the end of the year. In such a case inventories have increased (or accumulated). If the value of inventories is less at the end of the year compared to the beginning of the year, inventories have decreased (decumulated). …” |