Stock Valuation
Accounts · 50 practice questions
Methods of stock valuation — FIFO, LIFO and simple average; their advantages and disadvantages; the importance of stock valuation.
- Determine the value of materials issued and the closing stock using FIFO, LIFO and simple average.
- Compare the advantages and disadvantages of each method.
- Determine the effects of stock valuation on elements of the income statement.
Try a few questions
- Practice question 1
Physical stocktaking specifically involves the actual physical counting of stock items held, to verify
- A.the exact profit margin earned on each individual item of stock
- B.quantities recorded in the accounting records
- C.the exact selling price customers are willing to pay for the stock
- D.a factor entirely unrelated to quantities recorded in the accounting records
Show the answer
B. quantities recorded in the accounting records
Physical stocktaking specifically involves physically counting stock to verify quantities recorded in the accounting records.
- Practice question 2
The method chosen for stock valuation specifically can affect the value of the closing stock figure reported in
- A.no particular financial statement of any kind, regardless of method chosen
- B.the statement of financial position
- C.the business's own cash book exclusively, with no effect elsewhere
- D.a factor entirely unrelated to the statement of financial position
Show the answer
B. the statement of financial position
The method chosen for stock valuation specifically can affect the closing stock figure reported in the statement of financial position.
- Practice question 3
Consistent application of a chosen stock valuation method, from one period to the next, specifically supports
- A.comparability of financial results over time
- B.no particular benefit of any kind, despite the consistency applied
- C.a factor entirely unrelated to the comparability of financial results
- D.a deliberate distortion of financial results from one period to the next
Show the answer
A. comparability of financial results over time
Consistent application of a chosen stock valuation method specifically supports comparability of financial results over time.
More UTME Accounts topics
- Nature and Significance of Bookkeeping and Accounting
- Principles of Double Entry
- Ethics in Accounting
- Cash Book
- Bank Transactions and Reconciliation Statements
- Final Accounts of a Sole Trader
- Control Accounts and Self-Balancing Ledgers
- Incomplete Records and Single Entry
- Manufacturing Accounts
- Accounts of Not-For-Profit-Making Organizations
- Departmental Accounts
- Branch Accounts
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