A. Written down to zero or its scrap value
B. Shown in the Balance Sheet at its replacement cost
C. Shown in the Balance Sheet at cost, but classified as a non-current asset
D. Carried in the accounting records at cost until it is sold
Related Mcqs:
- Budgeted sales for the next year is 5,00,000 units. Desired ending finished goods inventory is 1,50,000 units and equivalent units in ending W-I-P inventory is 60,000 units. The opening finished goods inventory for the next year is 80,000 units, with 50,000 equivalent units in beginning W-I-P inventory How many equivalent units should be produced?
A. 5,80,000
B. 5,50,000
C. 5,00,000
D. 5,75,000 - The cost of obsolete inventory acquired several years ago, to be considered in a keep vs. disposal decision is an example of :
A. Uncontrollable cost
B. Sunk cost
C. Avoidable cost
D. Opportunity cost - Riaz holds an average inventory of 36,000(CP) with an inventory turnover of 5 times. If the firm makes a gross profit of 25% on sales, find the total sales of the company.
A. 2,40,000
B. 2,10,000
C. 2,00,000
D. 1,80,000 - The beginnings inventory of the current year is overstated by 5,000 and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by
A. 17,000 (overstated.
B. 12,000 (understated.
C. 7,000 (overstated.
D. 7,000 (understated. - During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?
A. The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013
B. The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013
C. The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013
D. The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013 - Which of the following is not classified as inventory in the financial statements?
A. Finished goods
B. Work-in-process
C. Stores and spares
D. Advance payments made to suppliers for raw materials - Consider the following data for a company during the month of June 2012 Budgeted hours 4,000 Standard hours for actual production 4,400 Maximum possible hours in the budget period 4,800 Actual hours 3,800 The activity ratio of the company during the month is
A. 111%
B. 120%
C. 95%
D. 117% - A company is currently operating at 80% capacity level. The production under normal capacity level is 1,50,000 units. The variable cost per unit is ` 14 and the total fixed costs are ` 8,00,000. If the company wants to earn a profit of ` 4,00,000, then the price of the product per unit should be
A. 37.50
B. 38.25
C. 24.00
D. 35.00 - While finalizing the current year‘s accounts, the company realized that an error was made in the calculation of closing stock of the previous year. In the previous year, closing stock was valued more by 50,000. As a result
A. Previous year‘s profit is overstated and current year‘s profit is also overstated.
B. Previous year‘s profit is understated and current year‘s profit is overstated.
C. Previous year‘s profit is overstated and current year‘s profit is understated.
D. There will be no impact on the profit of either the previous year or the current year. - Consider the following data pertaining to the production of a company for a particular month :
Opening stock of raw material 11,570
Closing stock of raw material 10,380
Purchase of raw material during the month 1,28,450
Total manufacturing cost charged to product 3,39,165
Factory overheads are applied at the rate of 45% of direct labour cost.
The amount of factory overheads applied to production is
A. 65,025
B. 94,287
C. 95,020
D. 1,52,624
The correct answer to the question: "Recent developments have made much of a company‘s inventory obsolete. This obsolete inventory should be?" is "Written down to zero or its scrap value".
