Acca financial Accounting (FA) Study Text ac ca (FA)

What was the value of inventory at 31 January using the first in, first 

out (FIFO) method?  

A $1,125 

B $725 

C $975 

D $1,000 

18 

What would be the effect on a business’ profit, which has been 

calculated including inventory at cost, of discovering that one of its 

inventory items which cost $7,500 has a net realisable value of 

$8,500?

 

A 

an increase of $8,500 

B 

an increase of $1,000 

C 

no effect at all 

D 

a decrease of $1,000 

19 

According to IAS 2 Inventories, which two of the following costs 

should be included in valuing the inventories of a manufacturing 

business?

 

 Selection 

Carriage outwards 

 

Depreciation of factory plant 

 

Carriage inwards 

 

General admin overheads 

 

 

 

---

 

Chapter 23 

KAPLAN PUBLISHING

 

467 

20  The closing inventory of X amounted to $116,400 excluding the following 

two inventory lines: 

– 

400 items which had cost $4 each. All were sold after the statement 

of financial position date for $3 each, with selling expenses of $200 

for the batch. 

– 

200 different items which had cost $30 each. These items were 

found to be defective at the statement of financial position date. 

Rectification work after the statement of financial position amounted 

to $1,200, after which the items were sold for $35 each, with selling 

expenses totalling $300.