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ACCA Knowledge Level Inventory Valuation — practice questions

Explore 8 free Inventory Valuation questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Inventory Valuation questions and exercises with answers

Showing questions 1–8 of 8.

Under IFRS, which inventory cost-flow assumptions are permitted for valuing inventory?Read the answer and worked solution →Using the FIFO perpetual results for June (19 units sold at $10 each; cost of merchandise sold $85), what is the gross profit?Read the answer and worked solution →A merchandiser sold 1 unit on 6/5, 12 units on 6/16, and 6 units on 6/30, each at a selling price of $10. What is total sales revenue for June?Read the answer and worked solution →Under the periodic average cost method, 30 units are available at a total cost of $150 and 19 units are sold. What is the cost of merchandise sold?Read the answer and worked solution →Under the periodic average cost method, 30 units cost $150 in total and 11 units remain in ending inventory. What is the ending inventory value?Read the answer and worked solution →Under IFRS, the comparison used to write inventory down when its value falls below cost is cost versus which measure?Read the answer and worked solution →IFRS Fact Check (ACCA FA)Read the answer and worked solution →Build the Definition (ACCA FA)Read the answer and worked solution →

Worked practice questions

Under IFRS, which inventory cost-flow assumptions are permitted for valuing inventory?

  1. LIFO and weighted average only
  2. FIFO and weighted average only
  3. FIFO and LIFO only
  4. LIFO and specific cost only
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Correct answer: B. FIFO and weighted average only

1. IFRS permits the first-in, first-out (FIFO) and weighted average cost formulas. 2. IFRS prohibits the last-in, first-out (LIFO) method. 3. Therefore the permitted pair is FIFO and weighted average. 4. Rule out any option containing LIFO, since LIFO is not allowed under IFRS. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1 "Inventory", p.113_

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Using the FIFO perpetual results for June (19 units sold at $10 each; cost of merchandise sold $85), what is the gross profit?

  1. $92
  2. $99
  3. $105
  4. $190
Show answer and solution

Correct answer: C. $105

1. Total sales = 19 units sold $\times \$10 = \$190$. 2. Gross profit = sales - cost of merchandise sold = $\$190 - \$85$. 3. Gross profit = $\$105$. 4. Rule out $\$92$: that is the LIFO gross profit for the same period. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.1 "Perpetual Inventory System", p.116_

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A merchandiser sold 1 unit on 6/5, 12 units on 6/16, and 6 units on 6/30, each at a selling price of $10. What is total sales revenue for June?

  1. $150
  2. $170
  3. $190
  4. $210
Show answer and solution

Correct answer: C. $190

1. Total units sold = $1 + 12 + 6 = 19$ units. 2. Each unit sells for $\$10$. 3. Total sales = $19 \times \$10 = \$190$. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.1 "Perpetual Inventory System", p.116_

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