Financial AccountingReceivables-MCQs

1. The closing inventory of X amounted to $116,400 excluding the following two inventory lines:
1    400 items which had cost $4 each. All were sold after the reporting period for $3 each, with selling expenses of $200 for the batch.
2    200 different items which had cost $30 each. These items were found to be defective at the end of the reporting period. Rectification work after the statement of financial position amounted to $1,200, after which they were sold for $35 each, with selling expenses totalling $300.

Which of the following total figures should appear in the statement of financial position of X for inventory?

2. 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?

3. A company with an accounting date of 31 October carried out a physical check of inventory on 4 November 20X3, leading to an inventory value at cost at this date of $483,700.
Between 1 November 20X3 and 4 November 20X3 the following transactions took place:
1.  Goods costing $38,400 were received from suppliers.
2.  Goods that had cost $14,800 were sold for $20,000.
3.  A customer returned, in good condition, some goods which had been sold to him in October for $600 and which had cost $400.
4.  The company returned goods that had cost $1,800 in October to the supplier, and received a credit note for them.

What figure should appear in the company’s financial statements at 31 October 20X3 for closing inventory, based on this information?

4. The information below relates to inventory item Z.
March 1      50 units held in opening inventory at a cost of $40 per unit
17     50 units purchased at a cost of $50 per unit
31    60 units sold at a selling price of $100 per unit

Under AVCO, what is the value of inventory held for item Z at the end of March 31?

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. 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.

7. 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?

8. IAS 2 Inventories defines the items that may be included in computing the value of an inventory of finished goods manufactured by a business.

Which one of the following lists consists only of items which may be included in the statement of financial position value of such inventories, according to IAS 2?

9. 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?

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