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WorksheetsFA Quiz (Inventory)
Total questions: 39
Worksheet time: 1hrs 15mins
What figure should be included in the financial statements for inventories at 30 June 20X3?
$952,750
$949,750
$926,750
$958,950
Which of the following costs may be included when arriving at the cost of finished goods inventory for inclusion in the financial statements of a manufacturing company?
1 and 5 only
2, 4 and 5 only
1, 3 and 5 only
1, 2, 3 and 4 only
What should the inventory value be according to IAS 2 Inventories after considering the above items?
$281,200
$282,800
$329,200
None of these
What is the value of the company’s closing inventory of engines at 30 April 20X3?
$188,500
$195,500
$166,000
None of these figures
Which of the following statements about the valuation of inventory are correct, according to IAS 2 Inventories?
1, 3 and 4 only
1 and 2 only
3 and 4 only
None of the statements are correct
What figure should appear in the company’s financial statements at 31 October 20X3 for closing inventory, based on this information?
$458,700
$505,900
$508,700
$461,500
In preparing its financial statements for the current year, a company’s closing inventory was understated by $300,000.
What will be the effect of this error if it remains uncorrected?
The current year's profit will be overstated and next year's profit will be understated.
The current year's profit will be understated but there will be no effect on next year's profit.
The current year's profit will be understated and next year's profit will be overstated.
The current year's profit will be overstated but there will be no effect on next year's profit
What inventory value should be included in Mitex Co’s financial statements at 31 December 20X1?
$525,400
$527,600
$529,200
$535,200
Which of the following statements about IAS 2 Inventories is correct?
Production overheads should be included in cost on the basis of a company's normal level of activity in the period.
In arriving at the net realisable value of inventories, trade discounts and settlement discounts must be deducted.
In arriving at the cost of inventories, FIFO, LIFO and weighted average cost formulas are acceptable.
It is permitted to value finished goods inventories at materials plus labour cost only, without adding production overheads.
What is the correct inventory valuation for inclusion in the financial statements?
$39,915
$40,755
$41,515
$42,995
What is the value of inventory at the year end?sells three products – Basic, Super and Luxury. The following information was available at the year end.
Basic Super Luxury
$ per unit $ per unit $ per unit
Original cost 6 9 18
Estimated selling price 9 12 15
Selling and distribution costs 1 4 5
units units units
Units of inventory 200 250 150
What is the value of inventory at the year end?
$4,200
$4,700
$5,700
$6,150
An inventory record card shows the following details.
February 1 50 units in stock at a cost of $40 per unit
7 100 units purchased at a cost of $45 per unit
14 80 units sold
21 50 units purchased at a cost of $50 per unit
28 60 units sold
What is the value of inventory at 28 February using the FIFO method?
$2,450
$2,700
$2,950
$3,000
IAS 2 Inventories defines the items that may be included in computing the value of an inventory of finished goods manufactured by a business.
Which one of the following lists consists only of items which may be included in the statement of financial position value of such inventories, according to IAS 2?
Supervisor's wages, carriage inwards, carriage outwards, raw materials
Raw materials, carriage inwards, costs of storage of finished goods, plant depreciation
Plant depreciation, carriage inwards, raw materials, Supervisor's wages
Carriage outwards, raw materials, Supervisor's wages, plant depreciation
The closing inventory of X amounted to $116,400 excluding the following two inventory lines:
1. 400 items which had cost $4 each. All were sold after the reporting period for $3 each, with selling expenses of $200 for the batch.
2. 200 different items which had cost $30 each. These items were found to be defective at the end of the reporting period. Rectification work after the statement of financial position amounted to $1,200, after which they were sold for $35 each, with selling expenses totalling $300.
Which of the following total figures should appear in the statement of financial position of X for inventory?
$122,300
$121,900
$122,900
$123,300
The inventory value for the financial statements of Q for the year ended 31 December 20X4 was based on an inventory count on 4 January 20X5, which gave a total inventory value of $836,200.
Between 31 December and 4 January 20X5, the following transactions took place:
$
Purchases of goods 8,600
Sales of goods (profit margin 30% on sales) 14,000
Goods returned by Q to supplier 700
What adjusted figure should be included in the financial statements for inventories at 31 December 20X4?
$838,100
$838,500
$818,500
$834,300
A company has decided to switch from using the FIFO method of inventory valuation to using the average cost method (AVCO).
In the first accounting period where the change is made, opening inventory valued by the FIFO method was $53,200. Closing inventory valued by the AVCO method was $59,800.
Total purchases and during the period were $136,500. Using the continuous AVCO method, opening inventory would have been valued at $56,200.
What is the cost of materials that should be included in the statement of profit or loss for the period?
$129,900
$132,900
$135,900
$140,100
Which one of the following statements about the use of a continuous inventory system is INCORRECT?
In a retail organisation, a continuous inventory system can be used to keep track of the quantity of each stock item available in its distribution centres.
Under continuous inventory, the cost of each receipt of inventory and the cost of each issue from inventory is recorded individually.
A continuous inventory system removes the need for periodic physical inventory counts.
Both the FIFO and average cost (AVCO) methods of pricing inventory may be used within a continuous inventory system.
The information below relates to inventory item Z.
March 1 50 units held in opening inventory at a cost of $40 per unit
17 50 units purchased at a cost of $50 per unit
31 60 units sold at a selling price of $100 per unit
Under AVCO, what is the value of inventory held for item Z at the end of March 31?
$4,000
$1,800
$2,000
$2,500
A firm has the following transactions with its product R.
1 January 20X1 Opening inventory: nil
1 February 20X1 Buys 10 units at $300 per unit
11 February 20X1 Buys 12 units at $250 per unit
1 April 20X1 Sells 8 units at $400 per unit
1 August 20X1 Buys 6 units at $200 per unit
1 December 20X1 Sells 12 units at $400 per unit
The firm uses periodic weighted average cost (AVCO) to value its inventory. What is the inventory value at the end of the year?
$nil
$2,057.12
$2,400.00
$2,007.20
W is registered for sales tax. The managing director has asked four staff in the accounts department why the output tax for the last quarter does not equal 20% of sales (20% is the rate of tax). Which one of the following four replies she received was not correct?
The company had some exports that were not liable to sales tax.
The company made some sales of zero-rated products.
The company made some sales of exempt products.
The company sold some products to businesses not registered for sales tax.
The following information relates to Eva Co's sales tax for the month of March 20X3: $
Sales (including sales tax) 109,250
Purchases (net of sales tax) 64,000
Sales tax is charged at a flat rate of 15%. Eva Co's sales tax account showed an opening credit balance of $4,540 at the beginning of the month and a closing debit balance of $2,720 at the end of the month.
What was the total sales tax paid to regulatory authorities during the month of March 20X3?
$6,470.00
$11,910.00
$14,047.50
$13,162.17
Alana is not registered for sales tax purposes. She has recently received an invoice for goods for resale which cost $500 before sales tax, which is levied at 15%. The total value was therefore $575.
What is the correct entry to be made in Alana’s general ledger in respect of the invoice?
Dr Purchases $500, Dr Sales tax $75, Cr Payables $575
Dr Purchases $575, Cr Sales tax $75, Cr Payables $500
Dr Purchases $500, Cr Payables $500
Dr Purchases $575, Cr Payables $575
Information relating to Lauren Co's transactions for the month of May 20X4 is shown below:
$
Sales (including sales tax) 140,000*
Purchases (net of sales tax) 65,000
Sales tax is charged at a flat rate of 20%. Lauren Co's sales tax account had a zero balance at the beginning of the month and at the end of the month.
* Lauren Co's sales for the month of $140,000 included $20,000 of sales exempt from sales tax.
What was the total sales tax paid to regulatory authorities at the end of May 20X4 (to the nearest $)?
$7,000
$20,000
$23,333
$13,000
A business commenced with capital in cash of $1,000. Inventory costing $800 plus sales tax is purchased on credit, and half is sold for $1,000 plus sales tax, the customer paying in cash The sales tax rate is 20%.
What would the accounting equation after these transactions show?
Assets $1,800 less Liabilities $200 equals Capital $1,600
Assets $2,200 less Liabilities $1,000 equals Capital $1,200
Assets $2,600 less Liabilities $800 equals Capital $1,800
Assets $2,600 less Liabilities $1,000 equals Capital $1,600
Trade receivables and payables in the financial statements of a sales tax registered trader will appear as described by which of the following?
Inclusive of sales tax in the statement of financial position
Exclusive of sales tax in the statement of financial position
The sales tax is deducted and added to the sales tax account in the statement of financial position
Sales tax does not appear in the statement of financial position because the business simply acts as a collector on behalf of the tax authorities
Which of the following correctly describe the entry in the sales account for a sale for a sales tax registered trader?
Credited with the total of sales made, including sales tax
Credited with the total of sales made, excluding sales tax
Debited with the total of sales made, including sales tax
Debited with the total of sales made, excluding sales tax
Sales (including sales tax) amounted to $27,612.50, and purchases (excluding sales tax) amounted to $18,000. What is the balance on the sales tax account, assuming all items are subject to sales tax at 17.5%?
$962.50 debit
$962.50 credit
$1,682.10 debit
$1,682.10 credit
A business had an opening inventory of $180,000 and a closing inventory of $220,000 in its financial statements for the year ended 31 December 20X5.
Which of the following entries for these opening and closing inventory figures are made when completing the financial records of the business?
Inventory account 180,000
Statement of profit or loss (SPL) 180,000
Statement of profit or loss (SPL) 220,000
Inventory account 220,000
Statement of profit or loss (SPL) 220,000
Inventory account 220,000
Inventory account 180,000
Statement of profit or loss (SPL) 180,000
Inventory account 40,000
Purchase account 40,000
Purchases account 40,000
Inventory account 40,000
On 1 September 20X6, a business had inventory of $380,000. During the month, sales totalled $650,000 and purchases $480,000. On 30 September 20X6 a fire destroyed some of the inventory. The undamaged goods in inventory were valued at $220,000. The business operates with a standard gross profit margin of 30%.
Based on this information, what is the cost of the inventory destroyed in the fire?
$185,000
$140,000
$405,000
$360,000
Which of the following statements about inventory valuation for statement of financial position purposes are correct?
1. According to IAS 2 Inventories, average cost and FIFO (first in, first out) are both acceptable methods of arriving at the cost of inventories.
2. Inventories of finished goods may be valued at labour and materials cost only, without including overheads.
3. Inventories should be valued at the lowest of cost, net realisable value and replacement cost.
4. It may be acceptable for inventories to be valued at selling price less estimated profit margin.
1 and 3
2 and 3
1 and 4
2 and 4
A firm has the following transactions with its product R.
1 January 20X1 Opening inventory: nil
1 February 20X1 Buys 10 units at $300 per unit 11 February 20X1 Buys 12 units at $250 per unit
1 April 20X1 Sells 8 units at $400 per unit
1 August 20X1 Buys 6 units at $200 per unit
1 December 20X1 Sells 12 units at $400 per unit
The firm uses FIFO to value its inventory. What is the inventory value at the end of the year?
$nil
$1,700
$2,400
$2,007.20
On 30 September 20X1 part of the inventory of a company was completely destroyed by fire.
The following information is available:
– Inventory at 1 September 20X1 at cost $49,800
– Purchases for September 20X1 $88,600
– Sales for September 20X1 $130,000
– Inventory at 30 September 20X1 – undamaged items $32,000 – Standard gross profit percentage on sales 30%
Based on this information, what is the cost of the inventory destroyed?
$17,800
$47,400
$15,400
$6,400
According to IAS 2 Inventories, which TWO of the following costs should be included in valuing the inventories of a manufacturing company ?
1. Carriage inwards
2. Carriage outward
3. Depreciation of factory plant
4. General administrative overheads
1 and 4
1 and 3
3 and 4
2 and 3
Which 1 of the following statements about sales tax
is/are true?
1.Sales tax is an expense to the ultimate consumer of the goods purchased
2. Sales tax is recorded as income in the accounts of the entity selling the goods
1 only
2 only
Both 1 and 2
Neither 1 nor 2
A company values its inventory using the FIFO method. At 1 May 20X5 the company had 700 engines in inventory, valued at $190 each. During the year ended 30 April 20X6 the following transactions took place:
20X5
1 July - Purchased 500 engines at $220 each 1 November Sold 400 engines for $160,000
20X6
1 February - Purchased 300 engines at $230 each 15 April Sold 250 engines for $125,000
What is the value of the company’s closing inventory of engines at 30 April 20X6?
$188,500
$195,500
$166,000
$106,000
The annual sales of a company are $235,000 including sales tax at 17.5%. Half of the sales are on credit terms, half are cash sales. The receivables in the statement of financial position are $23,500.
What is the output tax?
$17,500
$20,562.5
$35,000
$41,125
The closing inventory at cost of a company at 31 January 20X3 amounted to $284,700.
The following items were included at cost in the total:
1. 400 coats, which had cost $80 each and normally sold for $150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.
2. 800 skirts, which had cost $20 each. These too were found to be defective. Remedial work in February 20X3 cost $5 per skirt, and selling expenses for the batch totalled $800. They were sold for $28 each.
What should the inventory value be according to IAS 2 Inventories after considering the above items?
$281,200
$282,800
$329,200
None of these
Which of the following statements about the valuation of inventory are correct, according to IAS 2 Inventories?
1. Inventory items are normally to be valued at the higher of cost and net realisable value.
2. The cost of goods manufactured by an entity will include materials and labour only. Overhead costs cannot be included.
3. LIFO (last in, first out) cannot be used to value inventory.
4. Selling price less estimated profit margin may be used to arrive at cost if this gives a reasonable approximation to actual cost.
1, 3 and 4 only
1 and 2 only
3 and 4 only
None of these
A company with an accounting date of 31 October carried out a physical check of inventory on 4 November 20X3, leading to an inventory value at cost at this date of $483,700.
Between 1 November 20X3 and 4 November 20X3 the following transactions took place:
1. Goods costing $38,400 were received from suppliers.
2. Goods that had cost $14,800 were sold for $20,000.
3. A customer returned, in good condition, some goods which had been sold to him in October for $600
and which had cost $400.
4. The company returned goods that had cost $1,800 in October to the supplier, and received a credit note for them.
What figure should appear in the company's financial statements at 31st Oct. 2013 for closing inventory,
based on this information?
$458,700
$505,900
$508,700
$461,500
