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CA Foundation Inventories — practice questions — page 2

Explore 78 free Inventories questions in CA Foundation Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Inventories questions and exercises with answers

Showing questions 31–60 of 78.

How are trade discounts treated when computing the cost of purchase?Read the answer and worked solution →Abnormal wastage of materials in production is treated as?Read the answer and worked solution →Administrative overheads that do not help bring stock to its location areRead the answer and worked solution →Interest on borrowings is usually ... the cost of inventories under AS 2.Read the answer and worked solution →Specific identification of cost applies to items that areRead the answer and worked solution →Which cost formulas does AS 2 allow for interchangeable items?Read the answer and worked solution →Which method is not permitted by AS 2 for assigning inventory cost?Read the answer and worked solution →FIFO assumes the items left in closing stock were boughtRead the answer and worked solution →The weighted average formula averages the cost of opening stock withRead the answer and worked solution →Opening 100 units at Rs 10; bought 300 at Rs 14; sold 250. Average-cost closing stock?Read the answer and worked solution →In rising prices, FIFO shows ... closing stock value than LIFO.Read the answer and worked solution →The standard cost method may be used for convenience if results approximateRead the answer and worked solution →The retail method finds cost by deducting from sales value theRead the answer and worked solution →Stock at selling price is Rs 60,000; gross margin is 25% of sales. Retail-method cost?Read the answer and worked solution →Inventories are usually written down to NRV on what basis?Read the answer and worked solution →Which basis of writing down to NRV is not appropriate under AS 2?Read the answer and worked solution →How often is net realisable value assessed under AS 2?Read the answer and worked solution →Raw materials are not written down below cost if finished goods will sellRead the answer and worked solution →For stock held to meet firm sales contracts, NRV is based on theRead the answer and worked solution →AS 2 requires disclosure of which policy about inventories?Read the answer and worked solution →Which of these is a common classification of inventories?Read the answer and worked solution →Spare parts that meet the definition of PPE are accounted for underRead the answer and worked solution →Which item is outside the scope of AS 2?Read the answer and worked solution →Work in progress under construction contracts is dealt with inRead the answer and worked solution →Inventories include assets held for sale in the ordinary course ofRead the answer and worked solution →Fixed production overheads are allocated on the basis ofRead the answer and worked solution →Which is a fixed production overhead?Read the answer and worked solution →When output is low, fixed overhead per unit isRead the answer and worked solution →In abnormally high production, fixed overhead per unit isRead the answer and worked solution →Fixed overhead Rs 2,40,000; normal capacity 12,000 units; actual output 8,000. Overhead per unit?Read the answer and worked solution →

Worked practice questions

How are trade discounts treated when computing the cost of purchase?

  1. Added to cost
  2. Shown as income
  3. Ignored in cost
  4. Deducted from cost
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Correct answer: D. Deducted from cost

Trade discounts and rebates reduce what is actually paid for the goods, so they are deducted from the purchase cost.

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Abnormal wastage of materials in production is treated as?

  1. Part of inventory cost
  2. Part of purchase cost
  3. A deferred asset
  4. An expense of the period
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Correct answer: D. An expense of the period

Abnormal wastage does not add value to the goods, so it is charged to the period in which it occurs rather than to stock.

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Administrative overheads that do not help bring stock to its location are

  1. capitalised
  2. added to NRV
  3. expensed
  4. deferred
Show answer and solution

Correct answer: C. expensed

Such overheads are unrelated to getting the goods to their present location and condition, so they are recognised as expenses.

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