inventory

Question 1

Which system has a continuous record of inventory?

Answer 1

perpetual

Question 2

How is there a continuous record of inventory in the perpetual system

Answer 2

stock cards/sheets

Question 3

Stock take is necessary for which system

Answer 3

periodic

Question 4

Stock take is necessary for periodic system to determine

Answer 4

ending inventory
COGS
gross profit

Question 5

What are the disadvantages of stock takes

Answer 5

time consuming
disruptive to business
mistakes affect accuracy

Question 6

Stock-take is still done once a year for perpetual system to ensure that

Answer 6

actual stock tallies with balance in inventory a’c

Question 7

Which system offers more control over stock?

Answer 7

perpertual

Question 8

Which system reveals shortages?

Answer 8

perpetual

Question 9

Which system allows the determination of profit? why

Answer 9

perpetual.

COGS

Question 10

Which system is more costly? why

Answer 10

Perpetual
additional staff hours
more paperwork

Question 11

What are the inventory costing methods

Answer 11

FIFO

Weighted average

Question 12

costing methods deal with only the

Answer 12

costs not the selling price

Question 13

What are the new 3 costing methods in inventories 2?

Answer 13

fifo
lifo
weighted average

Question 14

In rising prices, which one will have the highest profit? why

Answer 14

FIFO. COGS is lower, the unit costs of goods sold is cheaper.

Question 15

Which one will have the highest current asset in times of rising prices. why?

Answer 15

FIFO. remaining unsold are bought later more expensive

Question 16

Which system matches more closely to the actual movement of goods

Answer 16

FIFO

Question 17

Which method gives a realistic profit figure

Answer 17

LIFO. current COGS with current prices of sale

Question 18

Which method produces a better valuation of inventory.

Answer 18

FIFO. closing inventory at more recent cost price

Question 19

Why is lifo unacceptable?

Answer 19

net profit is lower, taxation reduced

Question 20

what is the estimated selling price called?

Answer 20

net realisable value

Question 21

How can the net realisable value fall below cost?

Answer 21

physical deterioration
obsolescence
decline in price leel

Question 22

What is the rule when valuing inventory

Answer 22

lower of cost and net realisable value

Question 23

How is net realisable value calculated?

Answer 23

estimated selling price- estimated additional cost in making the sale

Question 24

The loss of inventory value is recorded in P&l under

Answer 24

inventory-write down

Question 25

An error in closing inventory will lead to what error in profit?

Answer 25

same number

same direction

Question 26

an error in opening inventory will lead to what error in profit

Answer 26

same number

oppsosite

Question 27

the cumulative years of profit for 2 years will be

Answer 27

the same amount