Cambridge 0452 and 0985 · Sub-topic 4.5
Valuation of inventory
The 3 skills the syllabus asks for, the slips that cost marks, and how our teachers explain it.
What students must be able to do
- Value inventory at the lower of cost and net realisable value.
- Calculate or prepare a simple valuation of inventory.
- Explain the effect of an incorrect valuation on gross profit, profit for the year, equity and assets.
Official wording: Cambridge IGCSE Accounting 0452: syllabus for 2027-2029 (Version 1), page 15; Cambridge IGCSE Accounting 0452: syllabus for examination in 2026 (Version 2, December 2025), page 14. See all sources.
How our teachers teach it
The rule is prudence in action: never show inventory above what the business could realistically recover. Our teachers have students compare cost with net realisable value item by item and take the lower. They then trace a mistake through the trading section to see how profit and equity move together. That second step is what examiners reward.
If any of these slips sound familiar, we can help. A teacher can mark your child's answers on valuation of inventory line by line and show where the marks go. Book a trial class.
How the wording changed for 2027
The 2026 syllabus refers to preparing simple inventory valuation statements; the 2027-2029 syllabus refers to calculating the value of inventory.
Where it is examined
Valuation of inventory can appear in either paper, as a short question or as part of a longer task. Cambridge bases both papers on the whole syllabus. See the guides to Paper 1 and Paper 2 for the format.
Sources: Cambridge IGCSE Accounting 0452: syllabus for 2027-2029 (Version 1), pages 9, 22. See all sources.
Practise it
- Key terms: Inventory, Net realisable value, Closing inventory, Opening inventory, Cost of sales
- Skills: How to value closing inventory, How to calculate cost of sales
- Layouts: Trading account (cost of sales) format
- Worked examples: income statement
- Practice questions: income statement
- One-to-one Cambridge 0452 tuition
Other sub-topics in topic 4
Valuation of inventory: questions
If closing inventory is overstated, what happens to profit?
Does the 0985 (9 to 1) syllabus cover valuation of inventory too?
Which syllabus numbering should I use?
Get help with valuation of inventory
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