Module 4

Question 1

How to calculate cost of sales?

Answer 1

Opening inventory + purchases - closing inventory

Question 2

If you have accruals and prepayments on a trail balance they are

Answer 2

Last years

Opening accruals and prepayments

Question 3

Markup

Answer 3

Sales 140
COS 100
Profit 40

Question 4

Margin

Answer 4

Sales 100
COS 60
Profit 40

Question 5

Inventory in trial balance has to be

Answer 5

Opening inventory

Question 6

What does FIFO stand for?

Answer 6

First in first out

Inventory

Question 7

What does AVCO stand for?

Answer 7

Weighted average cost

Question 8

Which inventory valuation policies can you use?

Answer 8

FIFO

AVCO

Question 9

Which inventory valuation policy can’t you use in financial accounting?

Answer 9

LIFO

Question 10

Valuation should be

Answer 10

Lower of cost and net realisable value (NRV, what you can seek it for)

Question 11

Gross profit margin calculation

Answer 11

Gross profit / sales X 100

Question 12

Gross profit markup calculation

Answer 12

Gross profit / cost of sales X 100

Question 13

Valuation should be in keeping with what concept?

Answer 13

Prudence