Financial AccountingReceivables-MCQs

1. Supervisor’s salary and equipment repair cost are examples of

2. The inventory value for the financial statements of Global Co for the year ended 30 June 20X3 was based on a inventory count on 7 July 20X3, which gave a total inventory value of $950,000.

Between 30 June and 7 July 20X6, the following transactions took place.

What figure should be included in the financial statements for inventories at 30 June 20X3?

3. Which of the following statements about the valuation of inventory are correct, according to IAS 2 Inventories?
1      Inventory items are normally to be valued at the higher of cost and net realisable value.
2     The cost of goods manufactured by an entity will include materials and labour only. Overhead costs cannot be included.
3     LIFO (last in, first out) cannot be used to value inventory.
4     Selling price less estimated profit margin may be used to arrive at cost if this gives a reasonable approximation to actual cost.

4. Which of the following costs may be included when arriving at the cost of finished goods inventory for inclusion in the financial statements of a manufacturing company?

1     Carriage inwards
2    Carriage outwards
3    Depreciation of factory plant
4    Finished goods storage costs
5    Factory supervisors’ wages

5. The closing inventory at cost of a company at 31 January 20X3 amounted to $284,700.

The following items were included at cost in the total:
1.      400 coats, which had cost $80 each and normally sold for $150 each.  Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.
2.     800 skirts, which had cost $20 each. These too were found to be defective. Remedial work in February 20X3 cost $5 per skirt, and selling expenses for the batch totalled $800. They were sold for $28 each.

What should the inventory value be according to IAS 2 Inventories after considering the above items?

6. You are preparing the financial statements for a business. The cost of the items in closing inventory is $41,875.  This includes some items which cost $1,960 and which were damaged in transit.

You have estimated that it will cost $360 to repair the items, and they can then be sold for $1,200.

What is the correct inventory valuation for inclusion in the financial statements?

7. Cost of goods manufactured – opening work in process + ending work in process =?

8. An inventory record card shows the following details.

February 1      50 units in stock at a cost of $40 per unit
7      100 units purchased at a cost of $45 per unit
14        80 units sold
21        50 units purchased at a cost of $50 per unit
28        60 units sold

What is the value of inventory at 28 February using the FIFO method?

9. The financial year of Mitex Co ended on 31 December 20X1. An inventory count on January 4 20X2 gave a total inventory value of $527,300.
The following transactions occurred between January 1 and January 4.

What inventory value should be included in Mitex Co’s financial statements at 31 December 20X1?

10. Which of the following is/are inventory valuation method(s)?