Higher Accounting - Inventory Theory

What is NOT an advantage of using AVCO for inventory valuation?

• Accepted by HMRC as a valid method for valuing inventory
• Simpler to calculate than FIFO and LIFO methods
• Ensures less price fluctuations when prices are stable
• Price charged to production reflects actual price paid

When is a new average price for inventory calculated under the AVCO method?

• Every time a delivery from supplier arrives
• Every time an issue from inventory is made
• Every time a new delivery arrives or when faulty inventory is returned
• Every time a return of faulty inventory is made

Inventory arrives on the following dates:-1 Jan 200 units @ £2 each3 Jan 400 units @ £2.50 eachWhat price should be recorded for the return of each of the 50 faulty goods found in the box with the delivery of 400 units?

• £2.50
• £125
• £2.33
  
• £116.50

Inventory arrives on the following dates:-1 Jan 200 units @ £2 each; 3 Jan 400 units @ £2.50 each.What price should be recorded for the return of each of the 50 faulty goods found in the box with the delivery of 400 units?

• £2.50
• £125
• £2.33
  
• £116.50

What is NOT a valid reason for finding a new supplier of raw materials?

• To purchase better quality inventory to reduce wastage
• To source cheaper raw materials and improve overall profitability
• To remove the threat of cash discounts for bulk buying inventory
• To avoid production hold-ups due to delays in delivery

In which order are transactions entered into an Inventory Record card?

• Price paid per unit order
• Quantity order
• Date order
• Value of balance order

Which of the columns below is NOT found in an Inventory Record Card?

• Price paid per itme
• Quantity bought
• To remove the threat of cash discounts for bulk Total value of inventory
• VAT or discounts amounts offered

Which purchasing document does NOT follow directly from the first document?

• Purchase requisition --> Quotation
• Order --> Goods Received Note
• Goods Received Note --> Bin Card
• Quotation --> Inventory Record Card

Which of the columns below is NOT found in an Inventory Record Card?

• Price paid per itme
• Quantity bought
• To remove the threat of cash discounts for bulk Total value of inventory
• VAT or discounts amounts offered

What does AVCO stand for?

• First In First Out

• Last in First Out

• Average Content

• Weighted Average