DEACC506 Unit 9: Inventory Valuation - MCQ Practice | M.Com - ODL

1 $FIFO stands for which of the following?$

FIFO Easy

A.

Fixed Input, Fixed Output

B.

Final In, First Out

C.

First Item, Final Order

D.

First In, First Out

2 $LIFO stands for which of the following?$

LIFO Easy

A.

Latest In, Fixed Out

B.

Last In, First Out

C.

Last Item, Final Order

D.

Least Input, First Output

3 $Under the FIFO method, materials issued to production are priced at the cost of the:$

FIFO Easy

A.

Earliest purchased stock

B.

Average of all purchases

C.

Highest priced purchase

D.

Most recent purchase

4 $Under the LIFO method, materials issued to production are priced at the cost of the:$

LIFO Easy

A.

Most recent purchase

B.

Earliest purchase

C.

Average of all purchases

D.

Opening stock only

5 $Which of the following is a method of pricing material issues?$

Methods of pricing material issues Easy

A.

VED analysis

B.

EOQ

C.

ABC analysis

D.

FIFO

6 $During a period of rising prices, the FIFO method generally results in:$

FIFO Easy

A.

Higher cost of materials issued

B.

Lower cost of materials issued

C.

Negative issue cost

D.

No effect on issue cost

7 $During a period of rising prices, the LIFO method generally results in:$

LIFO Easy

A.

Higher cost of materials issued

B.

Lower cost of materials issued

C.

Constant issue cost

D.

No effect on issue cost

8 $Under FIFO, the closing stock is valued at the cost of the:$

FIFO Easy

A.

Earliest purchases

B.

Cheapest purchase

C.

Average purchase price

D.

Most recent purchases

9 $Under LIFO, the closing stock is valued at the cost of the:$

LIFO Easy

A.

Earliest purchases

B.

Most recent purchases

C.

Highest purchase

D.

Average purchase price

10 $A firm buys 100 units at $10 and later 100 units at $12. Using FIFO, at what price are the first 100 units issued?$

FIFO Easy

A.

$11 per unit

B.

$22 per unit

C.

$12 per unit

D.

$10 per unit

11 $A firm buys 100 units at $10 and later 100 units at $12. Using LIFO, at what price are the first 100 units issued?$

LIFO Easy

A.

$11 per unit

B.

$12 per unit

C.

$10 per unit

D.

$22 per unit

12 $The main purpose of a material issue pricing method is to:$

Methods of pricing material issues Easy

A.

Assign a cost to materials issued from stores

B.

Decide the reorder quantity

C.

Determine the storage location

D.

Fix the selling price of finished goods

13 $Which statement about FIFO is correct?$

FIFO Easy

A.

All stock is issued at average cost

B.

Oldest stock is issued before newer stock

C.

Stock is issued at standard cost

D.

Newest stock is issued before older stock

14 $Which statement about LIFO is correct?$

LIFO Easy

A.

Newest stock is issued before older stock

B.

Stock is issued at average cost

C.

Stock is issued at market price

D.

Oldest stock is issued before newer stock

15 $In a period of falling prices, FIFO will generally produce a closing stock value that is:$

FIFO Easy

A.

Zero

B.

Unchanged

C.

Higher

D.

Lower

16 $Which of the following pairs are both actual-cost based methods of pricing issues?$

Methods of pricing material issues Easy

A.

FIFO and EOQ

B.

LIFO and ABC

C.

EOQ and VED

D.

FIFO and LIFO

17 $LIFO is generally not permitted for financial reporting under which standard?$

LIFO Easy

A.

IAS 7 (Cash Flows)

B.

IAS 16 (Property, Plant and Equipment)

C.

IAS 2 (Inventories)

D.

IFRS 15 (Revenue)

18 $Under FIFO, when the oldest lot is fully issued, subsequent issues are priced at the:$

FIFO Easy

A.

Newest lot's price

B.

Original opening price

C.

Next oldest lot's price

D.

Average price

19 $Under LIFO, when the newest lot is fully issued, subsequent issues are priced at the:$

LIFO Easy

A.

Next newest lot's price

B.

Oldest lot's price

C.

Standard price

D.

Average price

20 $Both FIFO and LIFO are examples of methods that price issues using:$

Methods of pricing material issues Easy

A.

Historical purchase cost

B.

Estimated future cost

C.

Replacement market price

D.

Predetermined standard cost

21 $A company had opening stock of 100 units at $10 each. It purchased 200 units at $12 on 5th and 150 units at $14 on 12th. If 250 units were issued on 15th under FIFO, what is the value of the issue?$

FIFO Medium

A.

$2,800

B.

$3,000

C.

$2,900

D.

$3,100

22 $Opening stock is 50 units at $8. Purchases: 100 units at $9, then 80 units at $11. If 120 units are issued under LIFO, what is the value of the issue?$

LIFO Medium

A.

$1,240

B.

$1,300

C.

$1,270

D.

$1,240

23 $During a period of rising prices, which pricing method generally results in the highest value of closing stock?$

Methods of pricing material issues Medium

A.

LIFO method

B.

Weighted average method

C.

FIFO method

D.

Simple average method

24 $Stock records show: 1st — 200 units at $5; 10th — 300 units at $6. On 15th, 350 units are issued. Under FIFO, what is the value of the closing stock?$

FIFO Medium

A.

$750

B.

$900

C.

$1,000

D.

$800

25 $A firm buys 100 units at $20 and later 150 units at $25. It issues 180 units under LIFO. What is the cost of the closing stock?$

LIFO Medium

A.

$1,500

B.

$1,600

C.

$1,750

D.

$1,400

26 $Which statement about the FIFO method is correct?$

Methods of pricing material issues Medium

A.

Issues are priced at the current market cost

B.

Issues are priced at the cost of the earliest purchases

C.

Issues are priced at the cost of the latest purchases

D.

Issues are priced at a periodic average cost

27 $During rising prices, the LIFO method tends to report:$

LIFO Medium

A.

Lower profit and higher closing stock

B.

Higher profit and lower closing stock

C.

Lower profit and lower closing stock

D.

Higher profit and higher closing stock

28 $Opening stock: 80 units at $15. Purchases: 120 units at $18. Issues: 90 units. Under FIFO, what is the total value of the issue?$

FIFO Medium

A.

$1,350

B.

$1,320

C.

$1,380

D.

$1,440

29 $Purchases in sequence: 60 units at $10, 40 units at $12, 50 units at $14. If 70 units are issued under LIFO, what is the value of the issue?$

LIFO Medium

A.

$900

B.

$960

C.

$940

D.

$920

30 $A key criticism of the LIFO method during inflation is that it:$

Methods of pricing material issues Medium

A.

Values closing stock at outdated, unrealistic prices

B.

Ignores the physical flow of oldest units

C.

Always overstates reported profit

D.

Values issues at outdated, unrealistic prices

31 $A store has 500 units at $4 as opening stock. It purchases 300 units at $5 and issues 600 units under FIFO. What is the closing stock value?$

FIFO Medium

A.

$1,000

B.

$900

C.

$800

D.

$1,200

32 $Opening stock: 40 units at $6. Purchase: 60 units at $7. Issue: 50 units under LIFO. What is the value of the issue?$

LIFO Medium

A.

$340

B.

$350

C.

$300

D.

$360

33 $When prices are falling steadily, which method gives a higher value of material issued to production?$

Methods of pricing material issues Medium

A.

Standard price method

B.

LIFO method

C.

FIFO method

D.

Replacement price method

34 $Receipts: 1st — 150 units at $8; 6th — 250 units at $9. Issues: 3rd — 100 units; 8th — 200 units. Under FIFO, what is the value of the issue on the 8th?$

FIFO Medium

A.

$1,800

B.

$1,750

C.

$1,650

D.

$1,700

35 $Receipts: 100 units at $10; 150 units at $12. Issue 1: 80 units; Issue 2: 120 units, both under LIFO. What is the value of Issue 2?$

LIFO Medium

A.

$1,440

B.

$1,320

C.

$1,360

D.

$1,400

36 $Which of the following is an advantage of the FIFO method?$

Methods of pricing material issues Medium

A.

It reports lower profit during inflation

B.

Closing stock reflects recent, near-current prices

C.

Issues reflect current replacement cost

D.

It smooths out price fluctuations in issues

37 $A firm reports higher cost of goods sold using LIFO than FIFO for the same period. This indicates that during the period prices were:$

LIFO Medium

A.

Fluctuating randomly

B.

Falling

C.

Rising

D.

Constant

38 $Opening stock: 200 units at $3. Purchases: 100 units at $4, 100 units at $5. Issues: 250 units under FIFO. What is the closing stock value?$

FIFO Medium

A.

$600

B.

$550

C.

$700

D.

$650

39 $Under which method does the value of closing stock most closely match the physical flow of goods in a business that sells perishable items first?$

Methods of pricing material issues Medium

A.

LIFO method

B.

Base stock method

C.

FIFO method

D.

Highest-in first-out method

40 $Purchases: 90 units at $15; 60 units at $18. If 100 units are issued under LIFO, what is the value of the closing stock?$

LIFO Medium

A.

$780

B.

$690

C.

$720

D.

$750

41 $A firm's material record shows: Opening stock 500 units @ $20; 5 Jan purchase 300 units @ $22; 10 Jan issue 600 units; 15 Jan purchase 400 units @ $25; 20 Jan issue 400 units. Using FIFO (perpetual), what is the total value of the two issues (10 Jan + 20 Jan)?$

FIFO Hard

A.

$22,166.67

B.

$21,600

C.

$21,166.67

D.

$22,600

42 $Using the same data (Opening 500 @ $20; 5 Jan buy 300 @ $22; 10 Jan issue 600; 15 Jan buy 400 @ $25; 20 Jan issue 400), what is the total value of issues under LIFO (perpetual) ?$

LIFO Hard

A.

$22,166.67

B.

$22,600

C.

$21,600

D.

$22,800

43 $With the same data, what is the closing stock value under FIFO (perpetual) after the 20 Jan issue?$

FIFO Hard

A.

$5,000

B.

$4,433.33

C.

$4,716.67

D.

$4,000

44 $With the same data, what is the closing stock value under LIFO (perpetual) ?$

LIFO Hard

A.

$4,000

B.

$5,000

C.

$4,433.33

D.

$4,150

45 $With the same data, what is the closing stock value under the moving (perpetual) weighted average method?$

Methods of pricing material issues Hard

A.

$4,150

B.

$5,000

C.

$4,433.33

D.

$4,716.67

46 $With the same data, what is the closing stock value under periodic (simple period-end) weighted average ?$

Methods of pricing material issues Hard

A.

$4,716.67

B.

$4,433.33

C.

$4,150

D.

$4,000

47 $Using the same data, the difference between the FIFO closing stock and the LIFO (perpetual) closing stock is:$

Methods of pricing material issues Hard

A.

$1,000, with FIFO higher because closing units are valued at the most recent (highest) price of $25 while LIFO retains the oldest $20 layer

B.

$716.67, with FIFO higher

C.

$433.33, with LIFO higher

D.

$1,000, with LIFO higher

48 $Purchases in sequence: 100 units @ $5, 200 units @ $6, 100 units @ $7. An issue of 250 units is made. What is the FIFO value of the issue ?$

FIFO Hard

A.

$1,600

B.

$1,350

C.

$1,400

D.

$1,500

49 $Using the same purchases (100 @ $5, 200 @ $6, 100 @ $7) and an issue of 250 units, what is the LIFO value of the issue ?$

LIFO Hard

A.

$1,400

B.

$1,650

C.

$1,600

D.

$1,500

50 $With purchases 100 @ $5, 200 @ $6, 100 @ $7 and an issue of 250 units, the FIFO closing stock (150 units) is valued at:$

FIFO Hard

A.

$1,000

B.

$900

C.

$1,050

D.

$800

51 $With purchases 100 @ $5, 200 @ $6, 100 @ $7 and an issue of 250 units, the LIFO closing stock (150 units) is valued at:$

LIFO Hard

A.

$800

B.

$750

C.

$1,000

D.

$900

52 $With purchases 100 @ $5, 200 @ $6, 100 @ $7 and an issue of 250 units, the weighted average issue value (periodic) is:$

Methods of pricing material issues Hard

A.

$1,450

B.

$1,400

C.

$1,500

D.

$1,600

53 $Which statement about LIFO under IAS 2 (Inventories) is correct?$

LIFO Hard

A.

LIFO is permitted only for manufacturing entities

B.

LIFO is permitted provided it is disclosed in the notes

C.

LIFO is prohibited because it can misrepresent inventory in the statement of financial position by valuing it at outdated costs

D.

LIFO is the preferred benchmark treatment under IAS 2

54 $In a period of continuously rising prices, which cost formula reports the highest gross profit, all else equal?$

Methods of pricing material issues Hard

A.

Weighted average

B.

FIFO

C.

Base stock

D.

LIFO

55 $Where LIFO is permitted, during sustained rising prices its main reported effect compared with FIFO is that it:$

LIFO Hard

A.

Raises taxable income by deferring recent costs

B.

Increases closing inventory relative to FIFO

C.

Lowers taxable income by charging the most recent higher costs to cost of sales

D.

Leaves taxable income unchanged versus FIFO

56 $A LIFO liquidation occurs and inflates reported profit when:$

LIFO Hard

A.

Physical inventory count matches book records exactly

B.

Sales exceed purchases so old, low-cost inventory layers are drawn down and matched against current revenue

C.

Purchases exceed sales, building up new cost layers

D.

Prices fall and the newest layers are sold

57 $During a period of falling prices, how does LIFO closing stock compare with FIFO closing stock?$

Methods of pricing material issues Hard

A.

LIFO closing stock is higher because it retains older, higher-cost units while charging recent lower costs to issues

B.

They are equal regardless of price movement

C.

LIFO closing stock equals the weighted average value

D.

LIFO closing stock is lower

58 $A key operational feature that distinguishes the moving (perpetual) weighted average method is that:$

Methods of pricing material issues Hard

A.

Issues are always priced at the latest purchase cost

B.

A new average unit cost is recomputed after every purchase

C.

It assigns the oldest cost to each issue

D.

The average is computed only once at period-end

59 $Under the base stock method, the value assigned to the minimum 'base' quantity of inventory is:$

Methods of pricing material issues Hard

A.

Always the weighted average of all purchases

B.

Revalued each period to current replacement cost

C.

Set equal to net realisable value at year-end

D.

Held at a fixed original (base) cost, with only quantities above the base priced by another method such as FIFO or LIFO

60 $Which statement best explains why FIFO closing inventory is often described as approximating current cost?$

FIFO Hard

A.

Closing stock consists of the oldest units, reflecting historical prices

B.

Closing stock consists of the most recently purchased units, so its carrying value reflects recent (near-current) prices

C.

FIFO revalues all inventory to replacement cost at year-end

D.

FIFO averages recent and old costs to approximate market value

Unit 9: Inventory Valuation - Practice Quiz

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