Always cost value is considered .....you should simply ignore the market value

Decision Making:
When faced with the choice between cost price and market price in the trial balance, it is important to consider the concept of conservatism in accounting.

Conservatism Principle:
The conservatism principle dictates that when faced with uncertainty, accountants should err on the side of caution. This means that if there is a discrepancy between cost price and market price, the lower value should be chosen to avoid overstating assets or income.

Closing Stock Adjustment:
- Closing stock refers to the value of inventory that remains unsold at the end of an accounting period.
- It is important to accurately value closing stock as it directly impacts the calculation of cost of goods sold and ultimately the determination of net income.

Selection Criteria:
When deciding between cost price and market price for closing stock valuation:
- Cost price should be chosen if it is lower than market price, as per the conservatism principle.
- Market price should only be considered if it is lower than cost price and there is evidence of a permanent decline in the value of the inventory.
By adhering to the conservatism principle and selecting the lower of cost price or market price for closing stock valuation, a more conservative and accurate financial statement can be presented.