➡️QUESTION⬅️
A business values their inventory using the AVCO method. The inventory on 1 June 2017 was 100 units valued at $2.40 each.
The following took place.
June 5 purchased 40 units at $2.50 per unit 7 sold 60 units at $3.50 per unit
What was the value of the inventory on 8 June 2017 to the nearest dollar?
A $194
B $196
C $200
D $224
ANSWER A
➡️QUESTION⬅️
Adam records his inventory using the AVCO (perpetual inventory) to calculate its value.
Which statement is correct?
A He only values it at the end of the month.
B He only values it at the year-end.
C He values it at the same price throughout the year.
D His inventory is valued after every purchase and issue.
ANSWER D
➡️QUESTION⬅️
How is the issue of inventory from stores valued when using FIFO?
A Itis calculated using the average purchase price of goods.
B It is calculated using the price paid for the earliest delivery of goods.
C it is the same as the current replacement cost.
D It is the same as the most recent price paid for the goods.
ANSWER B
➡️QUESTION⬅️
A company has a year-end of 31 December.
Its inventory records on that date showed an inventory of 600 units with a cost of $10 each.
A fire on 31 December had totally destroyed 100 units and caused a further 50 units to be damaged.
These would cost $7 each to be repaired.
The inventory records had not been adjusted for the fire. The selling price is $15 per unit.
What is the value of the inventory to be used in the financial statements at 31 December?
A $4500
B $4850
C $4900
D $5400
ANSWER C
➡️QUESTION⬅️
At the year-end, a business has some damaged goods in inventory. The following information is available.
1 The goods were purchased for $8500.
2 If the goods are repaired, they can be sold for $10400. The business will have to pay $2000 repairing cost and pay $300 to a salesman.
3 The same quantity of damaged goods can be purchased from the supplier for $8200.
What is the value of the damaged goods at the year-end?
A $8100
B $8200
C $8400
D $8500
ANSWER A
➡️QUESTION⬅️
Sam was unable to conduct a physical count of inventory at 31 December 2016.
On 3 January 2017 inventory had been sold to Abdul for $11 950. The cost price of this inventory had been $9560.
On 4 January 2017 inventory had been returned by Sita. It had been sold for $2390. The cost price of this inventory was $1912.
Sam valued his inventory at 5 January 2017 at cost, $59 750.
What was the value of inventory at 31 December 2016?
A $50190
B $52012
C $67398
D $69310
ANSWER C
➡️QUESTION⬅️
At the beginning of the financial year inventory was valued at $15000. During the year, sales of $21 000 and purchases of $18000 were made. Unfortunately, all inventory was stolen on the last day of the financial year.
Goods are marked up by 50% to calculate selling price.
What is the cost of the stolen inventory?
A $7500
B $11000
C $19000
D $22500
ANSWER C
➡️QUESTION⬅️
Which statements about valuing inventory are correct?
1. Any charges for carriage inwards should be included in its cost.
2 Cost should always be compared with the net realisable value.
3. Cost should always be compared with replacement price.
A 1,2and3
B 1and2only
C 1and3only
D 2and3only
ANSWER B
➡️QUESTION⬅️
A business has 500 items of inventory at a cost price of $3 each. The selling price per unit is based on a mark-up of 20%. Before sale, the items need to be repaired at a total cost of $400.
What is the net realisable value of the inventory?
A $1400
B $1475
C $2200
D $2275
ANSWER A
➡️QUESTION⬅️
The draft financial statements for a business included an inventory valued at $550 000.
This valuation included damaged items which originally cost $50000. These could be sold for $15000 provided that $5000 is spent on repairs.
What is the correct inventory valuation?
A $490000
B $500000
C $510000
D $515000
ANSWER C