Inventories-Valuation Inventory Techniques [CA (Chartered Accountant) Foundation Principles of Accounting]: Questions 1 - 3 of 20

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Question 1

Question MCQ▾

You are required to calculate the ending stock and cost of goods sold of Marks and Co. using the weighted average method assuming periodical system of inventory valuation. Marks and co. provides the following information

Marks and Co. Provides the Information
DateTransactionUnitsPrice per unit Rs.
March 2nd 2016Balance brought forward10001
March 9th 2016Purchases40001.5
March 14th 2016Sales3000
March 25th 2016Purchases50002
March 31stSales4000

weighted average cost will be

Choices

Choice (4)Response

a.

2.3

b.

1.7

c.

1.2

d.

1.5

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Question 2

Question MCQ▾

Which of these statement (s) are correct with respect to FIFO and Deflation?

Choices

Choice (4)Response

a.

In cases of inflation where there is a rise in prices, higher income is reported as the old costs are lesser than the current costs

b.

In case of deflation, where the prices are falling, there is lower income reported as the old costs are higher than the current costs.

c.

Under the FIFO method, the goods brought into the organization first are sent out of the organization first

d.

All a., b. and c. are correct

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Question 3

Question MCQ▾

How does the standard cost method help businesses manage production costs and improve efficiency?

Choices

Choice (4)Response

a.

This standard cost is used for valuation of the inventories

AND

A standard cost is set for each and every material, which is used in the operation of the business

b.

Issue of material is one of the specific efficiencies related to the standard cost

c.

Before setting the standard cost, the management has to take into account all the specific efficiencies related to the material

d.

All a., b. and c. are correct

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