Accounting Multiple Choice Question – 11 September 2022

Inventory has been damaged.

• The Inventory cost £1,200.
• It would have sold for £1,800 when perfect.
• It can be sold for £1,700 if repairs are undertaken at a cost of £600.
• To replace the inventory would cost £1,000.

At what value should the damaged inventory be shown in the final accounts?

Select ONE answer:

1. £1,000
2. £1,100
3. £1,200
4. £1,800

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

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

The answer is 2

1. Not correct
2. Correct– Lower of cost or NRV ==> £1,200 vs (£1,700 – £600)
3. Not correct
4. Not correct

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