Accounting Multiple Choice Question – 10 August 2026

Which ONE of the following is the LEAST significant risk in relation to an inventory balance in the financial statements?

Select ONE answer:

1. Inventory exists but has not been included in the financial statements
2. Inventory has been valued at cost when net realisable value is lower
3. Inventory has been valued when it is obsolete and has no value
4. Inventory has not been disclosed properly in the financial statements

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Inventory has not been disclosed properly in the financial statements constitutes the lowest risk, as the disclosure requirements in relation to inventory are not onerous. In contrast, inventory is often easy to conceal or omit from records or count wrongly, and, as it usually consists of many items, valuation can be tricky also.

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