Accounting Multiple Choice Question – 14 June 2023

Alex plc buys items for resale at a cost of £15 per unit.

They are normally sold for £22.

A damaged unit can only be sold at the normal selling price after modifications costing £14 are made by Alex plc.

The scrap value of the item is £7 per unit.

How much should the damaged unit be valued at in the balance sheet?

Select ONE answer:

1. £7
2. £8
3. £14
4. £15

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 2

1. Not correc
2. Correct – Lower of cost and NRV = = > Cost £15 vs NRV (£22 – £14) of £8
3. Not correct
4. Not correct

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