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1) The value of inventories or stock is figured out at the lower of cost and A) purchase price B) opportunity cost C) realizable value D) net realizable value

2) An overstatement in the value of closing stock overstates all of the following except A) Net income B) Current assets C) Capital of the business D) Cost of goods sold

3) Which of the following are generally the inventories of a service business A) Finished goods inventories B) Purchased goods C) Raw material inventories D) Work in process inventories

4) All of the following are the methods of inventory costing except A) FIFO

B) LIFO C) AVCO or average cost D) Stock take

5) Which one of the following methods of inventory costing yields highest taxable income? A) FIFO B) LIFO C) AVCO or average cost D) Standard cost method

6) Which one of the following methods of inventory costing produces ending stock cost close to the market value of the inventories? A) FIFO B) LIFO C) AVCO or average method

7) Which of the following inventory costing systems is regarded as the most complex one? A) Periodic inventory system B) Perpetual inventory system

8) Which one of the following double entries is passed when goods are purchased on credit under perpetual inventory system?

A) Purchases Debit and creditor Credit B) Purchases Debit and a/c payable Credit C) Purchases Debit and Cash Credit D) Inventory Debit and a/c payable Credit

9) Which of the following journal entries is passed when goods are purchased on credit under the periodic inventory system? A) Purchases Debit and cash Credit B) Cash Debit and Purchases Credit C) Purchases Debit and a/c payable Credit D) Inventory Debit and a/c payable Credit

10) Which one of the following inventory systems ascertains the balance of stock or amount of stock at the end of an accounting period or at the time of physical inventory count? A) Periodic inventory system B) Perpetual inventory system

11) Which one of the following inventory costing methods is supposed to issue the most recently purchased goods? A) FIFO method B) AVCO or average cost method C) LIFO method D) Moving average

12) Which of the following inventory systems is the most appropriate for a business that deals in a precious metal such as gold? A) Periodic inventory system B) Perpetual inventory system

13) Opening inventory + Net purchases = What? A) Ending inventory B) Closing stock C) Cost of goods manufactured D) Cost of goods available for sale

14) Cost of goods available for sale – closing inventory = What? A) Opening inventory B) Cost of opening finished goods inventory C) Work in process ending inventory D) Cost of goods sold

15) Gross profit is 25% on total sales and cost of goods sold amounts to $750. Which of the following is the amount of gross profit? A) $187.7 B) $200

C) $150 D) $250

16) At the end of XYZ firm’s accounting period, the closing stock was found to be $10,000. However, it was realized that a fixed asset of cost $1000 was included in the stock count. Which of the following is the correct amount of ending inventory or stock? A) $10,000 B) $11,000 C) $9000 D) $8000

17) NRV or net realizable value of inventory is the expected selling price or market value less A) Carry value of the inventory B) expenses necessary to complete sale C) Cost of the stock D) replacement cost

18) Cost of an item in the closing inventory is $100 whereas the net realizable value is $85. At which one of following amounts the item should be shown in the financial statement? A) $100 B) $115 C) $85 D) $185

19) An item of inventory was purchased for $100. It can be sold for $125 and company can replace the item with the new one at the cost of $105. Which of the following is the historical cost of that item? A) $125 B) $105 C) $100

20) Under which method of inventory costing a pre-determined cost is assigned to all items of inventory? A) Replacement cost method B) Standard cost method C) AVCO method D) FIFO method -