Inventory Valuation MCQs

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MCQs 1-10

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1. What does FIFO mean?

(a) Finished stock In Finished stock out

(b) Fabrications Inward Fabrications Outward

(d) First In First Out

Correct! Wrong!

2. Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a?

(a) Current asset

(b) Current liability

(d) Stockholder's equity

Correct! Wrong!

3. The latest cost of inventories is changed to production but the old prices are changed to inventories on hand?

(a) Average

(b) LIFO

(d) Perpetual

Correct! Wrong!

4. An increase in inventories indicates that?

(a) More merchandise was purchased then the amount sold to customer

(b) Less merchandise was purchased then sold to the customer

(d) Cash payments were more than purchases on account

Correct! Wrong!

5. Which type of inventory system is updated inventory system?

(a) Periodic inventory system

(b) Contingency inventory system

(d) Perpetual inventory system

Correct! Wrong!

6. What is the principal criterion used to distinguish between tangible assets and inventories?

(a) The physical substance of the asset

(b) The acquisition cost of the asset

(d) The moment in the accounting period when the asset is acquired

Correct! Wrong!

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

(d) Average Method

Correct! Wrong!

8. The inventories are recorded at the latest price but the production cost is changed old cost price?

(a) FIFO

(b) Average

(d) None

Correct! Wrong!

9. Which one of the following methods for inventory valuation may be misleading when the units are identical?

(a) FIFO Method

(b) LIFO Method

(d) None

Correct! Wrong!

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

(d) Rs. 54,000

Correct! Wrong!

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

(d) FIFO

Correct! Wrong!

12. In LIFO method of inventory valuation?

(a) Issue of stocks to production is at latest price

(b) Closing stock is at latest price

(d) Neither (a) nor (b)

Correct! Wrong!

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

(d) None of these

Correct! Wrong!

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

(d) Assets currently in production for normal sales

Correct! Wrong!

15. Net Purchases equal the invoice amount and?

(a) Plus freight-in, plus discounts

(b) Less purchase returns, plus purchase allowances

(d) Plus discounts, less purchase returns

Correct! Wrong!

16. In FIFO method of inventory valuation?

(a) Closing stock is at latest price

(b) Issue of stocks to production is at earliest price

(d) Neither (a) nor (b)

Correct! Wrong!

17. The average inventory costing method which results in a changed unit inventory cost after each successive purchase?

(a) Weighted average

(b) Moving average

(d) Simple average

Correct! Wrong!

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

(d) It requires individual identification of items some device like tags or serial numbers

Correct! Wrong!

19. Sales revenues are usually considered earned when?

(a) Cash is received from credit sales

(b) An order is received

(d) Adjusting entries are made

Correct! Wrong!

20. A retail firm would normally use an inventory account titled?

(a) Finished Goods Inventory

(b) Merchandise Inventory

(d) Raw Materials Inventory

Correct! Wrong!

Inventory Valuation (11-20)

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Back To Cost Accounting MCQs

Next To Labor cost MCQs

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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 5^th Edition – By William Lanen, Shannon Anderson, And Michael Maher

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Inventory Valuation MCQs

MCQs 1-10

Click The Option and See Result

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?

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?

8. The inventories are recorded at the latest price but the production cost is changed old cost price?

9. Which one of the following methods for inventory valuation may be misleading when the units are identical?

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?

MCQs 11-20

Click The Option and See Result

11. Which type of inventory system requires updating the inventory balance at the end of the accounting period?

12. In LIFO method of inventory valuation?

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?

14. Inventory does not include?

15. Net Purchases equal the invoice amount and?

16. In FIFO method of inventory valuation?

17. The average inventory costing method which results in a changed unit inventory cost after each successive purchase?

18. The specific cost identification inventory cost flow method has all of the following characteristics except?

19. Sales revenues are usually considered earned when?

20. A retail firm would normally use an inventory account titled?

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