Final Accounts Test 27

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Final Accounts Test 27

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Weekly Quiz Competition

Question 1
1 / -0

Which one out of the following is not an inventory valuation method?

A
FIFO

B
LIFO

C
Weighted Average

D
EOQ
Question 2
1 / -0

Which method of inventory valuation helps in reducing the burden of income tax in times of rising prices?

A
Last-in-first-out

B
First-in-first-out

C
Average cost

D
Base stock method
Question 3
1 / -0

Activities related to coordinating, controlling and planning flow of inventory are classified as ________________.

A
decisional management

B
throughput management

C
inventory management

D
manufacturing management
Question 4
1 / -0

A higher inventory ratio indicates ____________.

A
Better inventory management

B
Quicker turnover

C
Both A and B

D
None of the above
Question 5
1 / -0

Which method of inventory valuation is most widely used in accounting?

A
Cost price

B
Market price

C
Cost or market price whichever is greater

D
Cost or market price whichever is lower

Solution

Conservatism concept defines that all future losses should be recorded in books of account. Stock is normally valued at cost or market value whichever is lower.
Question 6
1 / -0

Given information:
Opening capital: $$Rs.5,000$$
Closing capital : $$Rs.6,000$$
Drawings : $$Rs.1,000$$
New capital invested : $$Rs.500$$
The profit for the year will be _____________.

A
$$Rs.2,000$$

B
$$Rs.1,500$$

C
$$Rs.1,000$$

D
$$Rs.500$$

Solution

The solution to the given problem can be found out through below equation:

Opening Capital
Add: Capital Invested during the year
Add: Profits during the year
------------------------------
Less: Drawings during the year
------------------------------
Balance - Closing Capital at the end

therefore,

Rs.5000 + Rs.500 + Profit - Rs.1000 = Rs.6000
Rs.5500 + Profit - Rs.1000 = Rs.6000
Rs.4500 + Profit = Rs.6000
Profit of the year = Rs.6000 - Rs.4500
Profit = Rs.1500
Question 7
1 / -0

If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ __________.

A
$$(2AO/C)^2$$

B
$$\sqrt{2AO/C}$$

C
2A $$\div$$ OC

D
2AOC

Solution

Economic order quantity (EOQ) is the order quantity of inventory that minimizes the total cost of inventory management. Two most important categories of inventory costs are ordering costs and carrying costs. Ordering costs are costs that are incurred on obtaining additional inventories. They include costs incurred on communicating the order, transportation cost, etc. Carrying costs represent the costs incurred on holding inventory in hand. They include the opportunity cost of money held up in inventories, storage costs, spoilage costs, etc.
If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ = $$sqrt[2AO}/{C}$$
Question 8
1 / -0

If the rate of gross profit is 25% on cost by goods sold and the sales are Rs. 2,00,000 the amount of profit will be ___________.

A
Rs. 50,000

B
Rs. 40,000

C
Rs. 45,000

D
Rs. 65,000

Solution

This can be simply calculated as :

Cost + Gross Profit=Sales
Assuming the cost is 100, than gross profit becomes 25
Hence
100+25= Sales i.e. 200000
therefore
200000/125*25= Rs.40000/-
Gross profit will be Rs.40000
Question 9
1 / -0

Which of the following is true for a company which continuous reviews its inventory system?

A
Order Interval is fixed

B
Order Interval varies

C
Order Quantity is fixed

D
Both A and C

Solution

Continuous inventory system or perpetual inventory system of inventory describes the system of inventory where information of inventory quantity with the availability is monitored on a regular basis.
As inventory ordering is also based on the availability of stock, order intervals may change because of the perpetual inventory system.
Question 10
1 / -0

A reserve is charged against __________.

A
Trading Account

B
Profit and Loss Account

C
Profit and Loss Appropriate Account

D
None of the Above

Solution

Charge to profit & loss appropriation would results in a debit to the profit & loss account and reduce the profit available for further distribution. Reserve mean the amount set aside from profit & loss account for an unknown liability or contingencies.

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Final Accounts Test 27

Result

Final Accounts Test 27

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SHARING IS CARING

Question 1

FIFO

LIFO

Weighted Average

EOQ

Question 2

Last-in-first-out

First-in-first-out

Average cost

Base stock method

Question 3

decisional management

throughput management

inventory management

manufacturing management

Question 4

Better inventory management

Quicker turnover

Both A and B

None of the above

Question 5

Cost price

Market price

Cost or market price whichever is greater

Cost or market price whichever is lower

Solution

Question 6

$$Rs.2,000$$

$$Rs.1,500$$

$$Rs.1,000$$

$$Rs.500$$

Solution

Question 7

$$(2AO/C)^2$$

$$\sqrt{2AO/C}$$

2A $$\div$$ OC

2AOC

Solution

Question 8

Rs. 50,000

Rs. 40,000

Rs. 45,000

Rs. 65,000

Solution

Question 9

Order Interval is fixed

Order Interval varies

Order Quantity is fixed

Both A and C

Solution

Question 10

Trading Account

Profit and Loss Account

Profit and Loss Appropriate Account

None of the Above

Solution

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