Inventory Valuation

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Financial And Managerial Accounting

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Home My courses FMA - PT2014 3 November - 9 November Inventory Valuation
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27 mins 41 secs

Question 1

A company uses a FIFO system for pricing inventory

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issues. During a period, product costs were overstated

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and profits were understated. This meant that during

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the period, prices were falling

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Select one:
True
False

Question 2

Use the following information for this question.

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Beginning inventory 10 units at $10 each, on January

Marked out of 1.0

20 purchase 10 units at $20 each, and on January 30

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purchase 5 units at $30 each. 15 of the 25 units are

sold. Calculate Cost of Goods Sold using the LIFO
costing method.
Select one:
a. $ 270
b. $ 350
c. $ 100
d. $ 200

Question 3

Use the following information for this question.

Complete

Beginning inventory 10 units at $10 each, on January

Marked out of 1.0

20 purchase 10 units at $20 each, and on January 30

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purchase 5 units at $30 each. 15 of the 25 units are

sold. Calculate Cost of Goods Sold using the FIFO
costing method.
Select one:

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Inventory Valuation

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a. None of the above

b. $ 200
c. $ 150
d. $ 350

Question 4

In case of rising prices, using the FIFO method of

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inventory valuation will result in lower valuation of

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closing stock than the LIFO method.

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Select one:
True
False

Question 5

Mr.Mike is a trader in Oranges. Each orange is resold

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for Rs 3 per unit and opening inventory for June was

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400 units valued at Rs 1.80 per unit. The wholesaler

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purchased a further 600 units on 10 June for Rs 2.10

per unit, and sold 800 units on 25 June. What gross
profit would be recorded for the sale of Oranges during
June, using he FIFO method of inventory valuation?
Select one:
a. Rs 960
b. Rs 780
c. Rs 1560
d. Rs 840

Question 6
Complete
Marked out of 1.0
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Inventory Valuation

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The opening inventory on Jan 1 at a production house

was 400 units valued at Rs 10 each. On Jan 2, the
company purchased 300 units at Rs 14 each. On Jan 4,
there was a request for 500 units of material. Calculate
the value of Closing Inventory if FIFO method is
followed.
Select one:
a. Rs 2000
b. 4200
c. 4200
d. Rs 2800

Question 7

The sparse accounting information available about a

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business indicates that the Sales were Rs 63,420;

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Purchases- Rs 49,150 and Beginning inventory - Rs

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1,892
You know that your client generally applies a mark-up
of 25%. Therefore, ending inventory, to the nearest Rs,
would be:
Select one:
a. Rs 3478
b. Rs 6648
c. Rs 306
d. Rs 6644

Question 8

Opening Stock on Jan 1 - 400 Units at Rs 10 each.

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Jan 2 - Purchased 300 Units at Rs 14 each.

Marked out of 1.0

A company uses the Weighted Average Method of

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Inventory Valuation. What is the per unit value of its

closing inventory?
Select one:
a. Rs 11.7
b. Rs 10
c. Rs 14
d. None of the above

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Question 9

Mr.Mike is a trader in Oranges. Each orange is resold

Complete

for Rs 3 per unit and opening inventory for June was

Marked out of 1.0

400 units valued at Rs 1.80 per unit. The wholesaler

purchased a further 600 units on 10 June for Rs 2.10

Flag question

per unit, and sold 800 units on 25 June. What gross

profit would be recorded for the sale of Oranges during
June, using he LIFO method of inventory valuation?
Select one:
a. Rs 840
b. Rs 700
c. Rs 780
d. Rs 960

Question 10

Opening Stock on Jan 1 - 400 Units at Rs 10 each.

Complete

Jan 2 - Purchased 300 Units at Rs 14 each.

Marked out of 1.0

Jan 5- Issued 200 Units

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A company uses the Weighted Average Method of

Inventory Valuation. What is the total value of its
closing inventory?
Select one:
a. Rs 6200
b. Rs 5857
c. Rs 2000
d. 5400

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FMA - PT2014

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