CA CPT - Basics of Accounting - Inventories

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Question - 1

In Stock Valuation, the principle at cost price or Market Price whichever is lower will result in the valuation of stock sometimes at cost price and at other times at Market Price. This is an application of the principle of -

  • A Consistency
  • B Materiality
  • C Conservatism
  • D Disclosure

Question - 2

A minimum quantity of stock always held as precaution against out of stock situation is called _____

  • A Zero stock
  • B Risk stock
  • C Base stock
  • D None of the above

Question - 3

Closing stock is valued at

  • A Market price
  • B Cost price
  • C Cost price or market price whichever is lower
  • D Cost price or market price whichever is higher

Question - 4

When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?

  • A Sales price net of conversion costs
  • B Net realizable value
  • C Historical cost
  • D Net realizable value reduced by normal profit margin.

Question - 5

By products are generally valued at ____ when the cost of by products is not directlytraceable.

  • A Cost of main products
  • B N.R.V.
  • C Cost of main product or N.R.V. whichever is lower
  • D None of these

Question - 6

Net realizable value is ______

  • A Estimated Selling Price
  • B Estimated Cost Price plus Marketing Cost
  • C Estimated Selling Price less Cost incurred in order to make sale
  • D Estimated Selling Price plus cost incurred in order to make sale

Question - 7

Which of the following is not a part of inventory?

  • A Finished goods
  • B Rawmaterial, Components, Consumables& Supplies
  • C Spare parts of Plant and Machinery
  • D Work-In-Progress

Question - 8

Inventory valuation method is guided by which of the following accounting concept

  • A Business entity
  • B Conservatism
  • C Materiality
  • D Double entry

Question - 9

Which is not an objective of inventory valuation?

  • A To determine true profit and loss
  • B To show true financial position of the business
  • C To properly value closing stock
  • D To evade tax liability

Question - 10

Which Cost is not considered as cost of inventory?

  • A Purchase cost
  • B Freight inward cost
  • C Interest cost
  • D Production cost
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