(a) Finished stock In Finished stock out (b) Fabrications Inward Fabrications
Outward (c) Final Input Final Output (d) First In First Out (a) Current asset (b) Current liability (c) Long-term asset (d) Stockholder's equity
(a) Average (b) LIFO (c) FIFO (d) Perpetual (a) More merchandise was purchased then the amount sold to customer (b) Less
merchandise was purchased then sold to the customer (c) Not all purchases were cash (d) Cash payments were more than purchases on account (a) Periodic inventory system (b) Contingency inventory system (c) LIFO (d) Perpetual inventory
system (a) The physical substance of the asset (b) The acquisition cost of the assetMCQs 1-10
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1. What does FIFO mean?
2. Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a?
3. The latest cost of inventories is changed to production but the old prices are changed to inventories on hand?
4. An increase in inventories indicates that?
5. Which type of inventory system is updated inventory system?
6. What is the principal criterion used to distinguish between tangible assets and inventories?
(c) The nature of the company’s activity, which determines the purpose for which the asset is held
(d) The moment in the accounting period when the asset is acquired
7. Which of the following method is suitable for calculating the cost of inventory when actual costs of individual units of merchandise can be determined from the accounting records?
(a) FIFO Method
(b) LIFO Method
(c) Specific Identification Method
(d) Average Method
8. The inventories are recorded at the latest price but the production cost is changed old cost price?
(a) FIFO
(b) Average
(c) Both A & B
(d) None
9. Which one of the following methods for inventory valuation may be misleading when the units are identical?
(a) FIFO Method
(b) LIFO Method
(c) Specific Identification Method
(d) None
10. During September, Khan had sales of 148,000, which made a gross profit of 40,000. Purchases amounted to 100,000 and opening inventory was 34,000. The value of closing inventory was?
(a) Rs. 24,000
(b) Rs. 26,000
(c) Rs. 42,000
(d) Rs. 54,000
Inventory Valuation (1-10)
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MCQs 11-20
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11. Which type of inventory system requires updating the inventory balance at the end of the accounting period?
(a) Periodic inventory system
(b) LIFO
(c) Perpetual inventory system
(d) FIFO
12. In LIFO method of inventory valuation?
(a) Issue of stocks to production is at latest price
(b) Closing stock is at latest price
(c) Both (a) & (b)
(d) Neither (a) nor (b)
13. The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be?
(a) FIFO
(b) LIFO
(c) Weighted average
(d) None of these
14. Inventory does not include?
(a) Materials used in the production of goods to be sold
(b) Assets intended to be sold in the normal course of business
(c) Equipment used in the manufacturing are sold
(d) Assets currently in production for normal sales
15. Net Purchases equal the invoice amount and?
(a) Plus freight-in, plus discounts
(b) Less purchase returns, plus purchase allowances
(c) Plus freight-in, less purchase discounts
(d) Plus discounts, less purchase returns
16. In FIFO method of inventory valuation?
(a) Closing stock is at latest price
(b) Issue of stocks to production is at earliest price
(c) Both (a) & (b)
(d) Neither (a) nor (b)
17. The average inventory costing method which results in a changed unit inventory cost after each successive purchase?
(a) Weighted average
(b) Moving average
(c) Specific cost
(d) Simple average
18. The specific cost identification inventory cost flow method has all of the following characteristics except?
(a) It identifies the cost of each physical item available for sale with either the ending inventory or cost of goods sold
(b) It relates cost flow to the specific flow of physical goods
(c) It is especially applicable when small and inexpensive items are handled in large quantities
(d) It requires individual identification of items some device like tags or serial numbers
19. Sales revenues are usually considered earned when?
(a) Cash is received from credit sales
(b) An order is received
(c) Goods have been transferred from the seller to the buyer
(d) Adjusting entries are made
20. A retail firm would normally use an inventory account titled?
(a) Finished Goods Inventory
(b) Merchandise Inventory
(c) Goods in Process Inventory
(d) Raw Materials Inventory
Inventory Valuation (11-20)
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References
Cost Accounting For Dummies – By Kenneth W. Boyd
Fundamentals Of Cost Accounting – By William Lanen, Shannon Anderson Et.Al
Cost Accounting Fundamentals – By Steven M. Bragg
Cost Accounting Made Simple – By Mike Piper
Principles Of Cost Accounting – By Maria R. Mitchell
Fundamentals Of Cost Accounting 5th Edition – By William Lanen, Shannon Anderson, And Michael Maher