Financial AccountingReceivables-MCQs

1. 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?

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

3. Which of the following statements about IAS 2 Inventories is correct?
Production overhead should be included in cost on the basis of a company’s normal level of activity in the period.
In arriving at the net realisable value of inventories, trade discounts and settlement discounts must be deducted.
In arriving at the cost of inventories, FIFO, LIFO and weighted average cost formulas are acceptable.
It is permitted to value finished goods inventories at materials plus labour cost only, without adding production overheads.

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. 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?

6. The inventory value for the financial statements of Q for the year ended 31 December 20X4 was based on an inventory count on 4 January 20X5, which gave a total inventory value of $836,200.
Between 31 December and 4 January 20X5, the following transactions took place:

What adjusted figure should be included in the financial statements for inventories at 31 December 20X4?

7. What would conversion costs if costs of raw materials, direct labor costs, and manufacturing overhead costs $80,000, $50,000, and $60,000, respectively?

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

9. 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.

10. 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?