11 markeasy
How should inventory be valued?
Choose your answer
cost
net realisable value
lower of cost and net realisable value
higher of cost and net realisable value
Accounting — 2021 Syllabus
8 questions · 8 marks · ≈ 8 min
How should inventory be valued?
Choose your answer
cost
net realisable value
lower of cost and net realisable value
higher of cost and net realisable value
Ned values one type of asset by choosing the lower value between the cost value and the net realisable value.
What type of asset is Ned valuing?
Choose your answer
inventory
vehicles
loose tools
equipment
At the end of the financial year, Adam had the following items of jewellery in his inventory.
What was the value of Adam's inventory?
Choose your answer
$2 250
$2 300
$3 250
$3 300
Anya provided the following information about her inventory at the end of the financial year.
| product | number of units | cost price per unit $ | selling price per unit $ |
|---|---|---|---|
| X | 150 | 4.50 | 7.00 |
| Y | 100 | 2.00 | 1.00 |
What was the total value of Anya's inventory?
Choose your answer
$775
$875
$1 150
$1 250
Felipe sells one product in two different colours, red and yellow.
The following information is available about his inventory at the end of the financial year.
| colour | number of units | cost price per unit $ | net realisable price per unit $ |
|---|---|---|---|
| red | 900 | 2.20 | 2.10 |
| yellow | 700 | 1.60 | 1.90 |
Felipe also found that 50 units of the yellow product were damaged and were unsaleable.
What was the total value of Felipe's inventory?
Choose your answer
$2 930
$3 020
$3 125
$3 220
Rosa provided the following information about her inventory at the end of her financial year.
Rosa discovered that 60 of these units were damaged and could be sold for $4 per unit.
What was the value of the closing inventory?
Choose your answer
$1 940
$2 000
$2 960
$3 200
Aisha has some goods which cost $400 and which can be sold for $500. When valuing her closing inventory, Aisha valued the goods at $500.
What is the effect of this error?
| gross profit | capital | |
|---|---|---|
| A | understated | understated |
| B | understated | no change |
| C | overstated | no change |
| D | overstated | overstated |
Choose your answer
Hamid has inventory which cost $550. After repairs costing $60, the inventory could be sold for $600.
What is the value of Hamid's inventory?
Choose your answer
$490
$540
$550
$600