Inventories 0 Inventories 1 / 30 Q.30 While finalizing the current year's profit, the company realized that there was an error in the valuation of closing stock of the previous year. In the previous year , closing stock was valued more by Rs.50,000. As a result Previous year's profit is overstated and current year's profit is also overstated Previous year's profit is understated and current year's profit is also overstated Previous year's profit is understated and current year's profit is also understated Previous year's profit is overstated and current year's profit is also understated 2 / 30 Q.29 If the goods are in transit , then the journal entry at the end of the period will be Goods-in-transit account Dr To Supplier's account Goods-in-transit account Dr To Purchases account Supplier's account Dr To Goods-in-transit account Stock account Dr To Goods-in-transit account 3 / 30 Q.28 C Ltd recorded the following information as on March 31,2005: Stock as on April 01,2004 Rs.80,000 , purchases Rs.1,60,000 , Sales Rs.2,00,000 It is noticed that goods worth Rs.30,000 were destroyed due to fire .Against this the insurance company accepted a claim of Rs.20,000. The company sells goods at cost plus 33.1/3 % .the value of closing stock , after taking into account the above transactions is , Rs.10,000 Rs.30,000 Rs.1,00,000 Rs.60,000 4 / 30 Q.27 The amount of purchase if , Cost of goods sold is Rs.80,700 ,Opening stock Rs.5,800 Closing stock Rs.6,000 Rs.80,500 Rs.74,900 Rs.74,700 Rs.80,900 5 / 30 Q.26 Cost of stock is Rs.2,38,000. Goods Purchases for Rs.10,000 & but are yet to be received; (ii)Goods costing Rs.20,000 sold & recorded but are yet to be delivered (iii) Goods costing Rs.5,000 were returned by the customers but omitted to be recorded (iv) Goods costing Rs.3,000 were returned to the supplier but omitted to be recorded . The value of physical inventory is Rs.2,26,000 Rs.2,50,000 Rs.2,30,000 Rs.2,46,000 6 / 30 Q.25 The cost of inventory as per physical verification as on March 24,2007 was Rs.4,00,000 Goods are sold at a profit of 25% on cost .On march 23rd ,Goods costing Rs.2,00,000 were received for sale on consignment basis 80% of the goods had been sold on 31st march .On march 23rd ,Goods of the sale value of Rs.2,00,000 were sent for sale on consignment basis 80% of the goods had been sold on 31st march. The cost of inventory as per books is Rs.4,00,000 Rs.2,40,000 Rs.2,32,000 Rs.2,72,000 7 / 30 Q.24 Bharat Indian Oil is a bulk distributor of petrol .A periodic inventory of petrol on hand is taken when the books are closed at the end of each month .the following summary of information is available for the month : sales Rs.9,45,000 ; General administration cost Rs.25,000 ; Opening Stock : 1,00,000 litres @ Rs.3 per liter Rs.3,00,000 . ;Purchases (including freight inward) ;June 1- 2,00,000 litres @ Rs.2.85 per litre ; June 30 -1,00,000 litres @ Rs.3.03 per litre ;June 30- Closing stock 1,30,000 litres . The value of inventory on June 30 using weighted average method of inventory costing is Rs.3,75,000 Rs.3,81,225 Rs.2,80,000 Rs.4,10,000 8 / 30 Q.23 The following details supplied to Cas Ltd in respect of its raw material for the month of December 2007 , Date :-01-12-2007 , Particulars :Receipts (units ) :- 2,000 opening, Rate :- Rs.10 ,Issues units) ;- 0 : Date :-07-12-2007 , Particulars :Receipts (units ) :- 1,000, Rate :- Rs.12 ,Issues :- nil ; Date :-10-12-2007 , Particulars :Receipts (units ) :- 0, Rate :- Rs.0 ,Issues (units ) ;-2,500 ; Date :-15-12-2007 , Particulars :Receipts (units ) :- 2,000, Rate :- Rs.13 ,Issues :- nil ; Date :-31-12-2007 , Particulars :Receipts (units ) :- 0, Rate :- Rs.0,Issues :- 2,200 ; ,On 31.12.2007 , a shortage of 100 units was found. using the data given in the problem , the value of issue in the month of December 2007 using LIFO method principle Rs.70,000 Rs.55,000 Rs.40,000 Rs.1,30,000 9 / 30 Q.22 Consider the following information pertaining to N Ltd for the month of March 2007: Date :-01-03-2007 , Particulars :Quantity(kg) :- Nil, Rate :- Rs.0 ,Issues :- :,Quantity(kg) ;- 0 :, Balance:-Quantity(kg) :- 500 , Rate :- Rs.45.60 ,: Date :-02-03-2007 , Particulars :Quantity(kg) :- 400, Rate :- Rs.48 ,Issues :- nil ;,Quantity(kg) ;- 0 :, Balance:-Quantity(kg) :- 0 , Rate :- -:,Date :-10-03-2007 , Particulars :Quantity(kg) :- 600, Rate :- Rs.50 ,Issues :- :,Quantity(kg) ;- 0 :, Balance:-Quantity(kg) :- 0 , Rate :-0 , Date :-25-03-2007 , Particulars :Quantity(kg) :- 0, Rate :- Rs.0 ,Issues :- :,Quantity(kg) ;-1, 000 :, Balance:-Quantity(kg) :- 0 , Rate :-0. If the company uses weighted average method for inventory valuation , the value of inventory as on March 31,2007 is Rs.23,800 Rs.24,000 Rs.25,000 Rs.22,800 10 / 30 Q.21 the books of CAS Ltd reveled the following information for the month of march 2007 ; Opening inventory Rs.44,000 ;closing stock Rs.50,000 Purchase less return Rs.2,20,000 ;gross profit on sales 20 % .the sales are Rs.2,82,500 Rs.2,71,200 Rs.2,56,800 Rs.2,67,500 11 / 30 Q.20 under inflationary conditions ,which of the method will show lowest value of cost of goods sold ? FIFO LIFO Weighted Average None of these 12 / 30 Q.19 under inflationary conditions ,which of the method will show lowest value of closing stock ? FIFO LIFO Weighted Average None of these 13 / 30 Q.18 where cost of by product can not be separately determined ,inventory of by products should be valued at cost or market price which ever is lower cost or market price which ever is higher at net realizable value cost or current replacement price which ever is lower 14 / 30 Q.17 Consider the following information pretaining to credit purchase made by K Ltd.,a dealer in electronic goods for the month of March 2005: Date :-March 01 , Particulars :- Black & White TV's , No.of units - 50 , Rate per unit :- 3,000 , Trade Discount ;-10% , Date :-March 01, Particulars :-colour TV's :- No.of units -: 10 , Rate per unit :- 6,000 , Trade Discount ;-10% , Date :-March 09, Particulars :- Tape Recorders No.of units -: 10 , Rate per unit :- 1,000 , Trade Discount ;-10%, Date :-March 09, Particulars :- Two-in-one , No.of units -: 10 , Rate per unit :- 1,500 , Trade Discount ;-10% ,Date :-March 19, Particulars :- Audio cassettes , No.of units -: 100 , Rate per unit :- 30 , Trade Discount ;- 5% . On March 22 , 2005 , the company purchased from LM Stationers on credit for office use 10 dozens of carbon papers at the rate of Rs.35 per dozen and 10 dozen of ball pens at the rate of Rs.25 per dozen. At the time of making payment on March 31,2005 ,the suppliers have allowed a cash discount of 10%on the above purchases. The total of purchases for the month of march 2005,was Rs.2,14,350 Rs.2,38,000 Rs.1,92,915 Rs.2,38,600 15 / 30 Q.16 O Ltd .maintains the inventory records under perpetual system of inventory. Considers the following data pertaining to inventory of O Ltd. Held for the month of March 2005 :Date :-Mar. 1 , Particulars ;- Opening inventory , Quantity :-15 , Cost per unit (Rs.):-400, Date :-Mar. 4 , Particulars ;- Purchase , Quantity :- 20 , Cost per unit (Rs.):- 450 ; Date :-Mar. 6 , Particulars ;- Purchase , Quantity :- 10 , Cost per unit (Rs.):- 460 ;. If the company sold 32 units on March 24,2005,Closing inventory under FIFO method is Rs.5,200 Rs.5,681 Rs.5,800 Rs.5,950 16 / 30 Q.15 E Ltd ., a dealer in second -hand car's has the following five vehicles of different models and makes in their stock at the end of the financial years 2004-2005: Car- fiat ,Cost- 90,000 , Net realizable value Rs.95,000 ,Car-Ambassador , Cost-1,15,000 , Net realizable value Rs.1,55,000 , Car-Marti- Esteem , Cost-2,75,000 , Net realizable value Rs.2,65,000 , Car-Marti- 800 , Cost-1,00,000 , Net realizable value Rs.1,25,000 , Car-Zen , Cost-2,10,000 , Net realizable value Rs.2,00,000 . The value of Stock included in the balance sheet of the company as on March 31,2005 was Rs.7,62,500 Rs.7,70,000 Rs.7,90,000 Rs.8,70,000 17 / 30 Q.14 D Company , a dealer in cosmetics , records its inventory under first-in-first-out method , so as to minimize accumulation of outdated stock . The opening stock as on September 01,2005 is 150 units at the rate of Rs.20 per unit . The purchase and Sales made during the month are: Purchases on 04-09-2005 , 200 units , cost price per unit Rs.25, on 14-09-2005 , 100 units cost price per unit Rs.22 ; Sales on 03-09-2005, No of units 100 , and , on 10-0--2005 No of units 150 With effect from September 01, 2005 , the company decided to change the method of inventory to LIFO consequent upon the change in the method of valuation is Increase in the value of closing stock by Rs.250. Decrease in the value of closing stock by Rs.250. Increase in the value of closing stock by Rs.500. Decrease in the value of closing stock by Rs.500. 18 / 30 Q.13 If the profit is 25% of the cost price then it is 25%of the Sale price 33%of the Sale price 20%of the Sale price 15%of the Sale price 19 / 30 Q.12 Under inflationary conditions, which of the methods will not show greatest value of cost of goods sold? (i) FIFO (ii) LIFO (iii) Weighted average (iv) All of the above. (i) and (iii) (i) and (ii) (iii) and (iv) (i) and (iv) 20 / 30 Q.11 Using Adjusted selling price method. Find closing stock at historical cost: Purchase = 7,00,000 Opening Stock & Direct Exp. = Nil Sales = 8,00,000 Closing Stock at selling price = 200,000 1,40,000 1,80,000 2,40,000 1,00,000 21 / 30 Q.10 An overvaluation of current years opening inventory will Causes current overstated year's net income to be Cause previous understated year's net income to be Cause previous overstated year's net income to be Have no affect 22 / 30 Q.9 The following are the features of perpetual inventory system except _____. Inventory control can be achieved under this system Inventory cannot be determined without affecting the operations of the business This provides information about the cost of goods sold This is costlier method than periodic inventory system. 23 / 30 Q.8 The cost of inventory as per physical verification as on March 24,2007 was Rs.4,00,000 Goods are sold at a profit of 25% on cost .On march 21st ,Goods of the sale value of Rs.1,00,000 were sent on sale or return basis to a customer ,the period of approval being two weeks. He returned 20% of the goods & approved the remaining on 31st March The cost of inventory as per books is Rs.4,80,000 Rs.4,16,000 Rs.4,48,000 None of these 24 / 30 Q.7 The cost of inventory as per physical verification as on March 24,2007 was Rs.4,00,000 Goods are sold at a profit of 25% on cost .On march 21st ,Goods of the sale value of Rs.1,00,000 were sent on sale or return basis to a customer ,the period of approval being two weeks. The cost of inventory as per books is Rs.4,80,000 Rs.4,16,000 Rs.4,28,800 None of these 25 / 30 Q.6 The cost of inventory as per physical verification as on March 24,2007 was Rs.4,00,000:Between 24th March & 31st March the following transaction took place, Purchases Rs.2,00,000 out of which 20% goods were returned. Sales of Rs.2,00,000 out of which 20 % goods were returned .Goods are sold at a profit of 25% on cost. The cost of inventory as per books is Rs.4,00,000 Rs.3,68,000 Rs.4,32,000 None of these 26 / 30 Q.5 Bharat Indian Oil is a bulk distributor of petrol .A periodic inventory of petrol on hand is taken when the books are closed at the end of each month .the following summary of information is available for the month : sales Rs.9,45,000 ; General administration cost Rs.25,000 ; Opening Stock : 1,00,000 litres @ Rs.3 per liter Rs.3,00,000 . ;Purchases (including freight inward) ;June 1- 2,00,000 litres @ Rs.2.85 per litre ; June 30 -1,00,000 litres @ Rs.3.03 per litre ;June 30- Closing stock 1,30,000 litres . The amount of cost of goods sold for June using LIFO method is Rs.7,87,500 Rs.6,75,000 Rs.8,15,000 Rs.7,95,000 27 / 30 Q.4 the books of CAS Ltd reveled the following information ; Opening inventory Rs.30,00,000 ; Purchase during the year 06-07 Rs.90,00,000 ; Sales Rs.1,00,00,000 . On march 31,2007 , the value of inventory as per physical stock-taking was Rs.41,80,000.The company gross profit on sales has remained constant at 25 %.the management of the company suspects that some inventory might have been taken away by a new employee . the estimated cost of missing inventory on the close of the financial year & the cost of goods sold during the year respectively are Rs.5,30,000 ; Rs.75,00,000 Rs.4,20,000 ; Rs.78,20,000 Rs.3,50,000 ; Rs.1,00,00,000 Rs.3,20,000 ; Rs.75,00,000 28 / 30 Q.3 if the closing stock is understated the profit will increase & current asset will decrease the profit will decrease & current asset will increase both profit & current asset will increase both profit & current asset will decrease 29 / 30 Q.2 if the opening inventory is understated the profit will increase the profit will decrease the profit will not change None of these 30 / 30 Q.1 The books of T.ltd. Revealed the following information :opening inventory Rs.6,00,000 , Purchase during the year 2003/2004 Rs.34,00,000 Sales during the Year 2003/2004 Rs.48,00,000 . On March 31, 2004 , the value of inventory as per physical stock -taking was Rs.3,25,000. The company's gross profit on Sales has remained constant at 25%. The management of the company suspects that some inventory might have been pilfered by a new employee. What is the estimated cost of missing inventory ? Rs.75,000 Rs.25,000 Rs.1,00,000 Rs.1,50,000 Your score is LinkedIn Facebook Twitter VKontakte