a. Explain the meaning of the terms ‘cost’ and ‘net realisable value’.
b. State how a trader should value the inventory at the end of the financial year.
c. At the end of the financial year on 30 June 20–6, a trader discovered that he had undervalued his closing inventory by $1,000.
Complete the following table by placing a tick in the correct columns to show the effect of this:

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Overstated Understated No effect Profit for the year ended 30 June 20-6 Gross profit for the year ended 30 June 20-7 Current assets on 30 June 20-7