Accounting Multiple Choice Question – 9 February 2020

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A firm has two categories of stock. The cost and net realisable value (NRV) of each are as follows:

Cost          NRV

Category 1         £35,000   £22,000
Category 2         £22,000   £25,000

Select ONE answer:

  1. £44,000
  2. £47,000
  3. £57,000
  4. £60,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

Correct – Stock should be valued at the lower of its cost and its net realisable value (NRV) on an item- by-item or category-by-category basis (not on a total basis)

  1. Category: Cost or NRV = Lower of Cost and NRV
    1 £35,000 or £22,000 = £22,000
    2 £22,000 or £25,000 = £22,000
    = Total of £44,000
  2. Not correct
  3. Not correct
  4. Not correct

 

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