Accounting Multiple Choice Question – 9 February 2020

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor View all posts by stuart001uk2014