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By Accounting Mcqs No Comments

Which of the following assets is/are to be valued at the lower of cost and net realizable value?

A. Goodwill
B. Inventories
C. Investments
D. Both B. and C. above.

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Inventories B. are to be valued at the lower of cost and net realizable value. All the other assets stated in other alternatives are valued as per the cost concept. Goodwill A. is a fixed intangible asset and is shown at the cost of its acquisition. Investments C. are valued at cost or market value whichever is less. The combination of B. and C. is incorrect because a correct answer with incorrect answer is an incorrect answer. Thus, the correct answer is B

Related Mcqs:

  1. Any gain on the sale of non-current assets should be _________ from the net profit and the loss must be _________to the net profit in determining fund from operation?

    A. Added, Reduced
    B. Added, Added
    C. Deducted, Added
    D. Deducted, Deducted

  2. If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=? Capital+Liabilities=$15000 What is the Amount of total assets?

    A. $5000
    B. $10,000
    C. $15,000
    D. $20,000

  3. Closing stock is generally valued at______________?

    A. Cost Price
    B. Market Price
    C. Cost price or Market price whichever is higher
    D. Cost price or Market price whichever is lower

  4. 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.

  5. Prepaid expenses are valued on the Balance Sheet at

    A. Replacement cost
    B. Current cost
    C. Cost to acquire less accumulated amortization
    D. Cost less expired portion

  6. The assets which have some market value are called ____________?

    A. Fixed asset
    B. Quick asset
    C. Fictitious assets
    D. Real assets

  7. Find out the value of assets if: Liabilities=$5000 and Capital=$1000

    A. $4000
    B. $6000
    C. $7000
    D. $3000

  8. The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is_________?

    A. Depreciation
    B. Physical deterioration of the asset
    C. Decrease in market value of the asset
    D. Valuation of an asset at a point of time

  9. Which of the following items should not be capitalized relating to fixed assets?

    A. Interest payable on loans or deferred credits taken for the acquisition or construction of fixed assets before they are ready for use
    B. Stand by equipment and servicing equipment
    C. Expenditure incurred on test runs and experimental production
    D. Administration and general expenses

  10. Which of the following are current assets of a business?

    i. Income received in advance
    ii. Stock
    iii. Debtors
    iv. Pre-paid expenses
    v. Accrued income

    A. Both (i) and (iv) above
    B. Both (ii) and (iii) above
    C. (i),(ii) and (iii) above
    D. (ii),(iii),(iv) and (v) above

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The correct answer to the question: "Which of the following assets is/are to be valued at the lower of cost and net realizable value?" is "Inventories".

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