Chapter 7: cost of sales and inventory

what would be the effect on a business's profit of discovery that inventory with a cost of £1,250 and a net realizable value of £1,000 had been omitted from the inventory count at the end of the reporting period?

• an increase of £1,250

• an increase of £1,000

• a decrease of £250

• no effect

during the reporting period, Malcolm took items with a selling price of £280 for his own use . he trades at a 40% of mark-up and had a draft profit of £15,800 before making any adjustments for this matter. his final profit is:

• £15,520

• £15,800

• £15,600

• £16,000

a business has opening inventory of £7,200 and closing inventory of £8,100. purchase for the year were £76,500, delivery inwards was £50 and delivery outwards was £180. what is the correct amount for cost of sale ?

• £75,5050

• £75,650

• £75,830

• £77,450

Muse plc began trading on 1 jan 20x8 and had zero inventories at that date. during 20x8, it made purchases of £455,000, incurred delivery inwards of £24,000 and delivery outwards of £29,000. closing inventories at 31 Dec 20x8 were £52,000. what was the correct amount for cost of sales for the year ended 31 dec 20x8?

• £456,000

• £427,00

• £432,000

• £531,000

in the period of rising price, applying the FIFO method to determine the cost of inventories will give a lower gross profit figure than the AVCO method

• true

• false

closing inventory is a debit in the statement of profit or loss

• true

• false

A van for resale by a dealer is shown as a non-current asset in its statement of financial position

• true

• false

import duties are included in the cost of inventory

• true

• false

which two of the following may be included when arriving at the cost of finished goods inventory inclusion in the financial statements of a manufacturing company?

• delivery inwards

• delivery outwards

• depreciation of delivery vehicles

• finished goods storage costs

• production line wages

when calculating the cost of inventory, which of the following shows the correct method of arriving at cost?

• include inward delivery cost, exclude production overheads

• exclude inward delivery cost, include production overheads

• include inward delivery cost, include production overheads

• exclude inward delivery cost, exclude production overheads