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

1 $FIFO stands for which of the following?$

FIFO Easy

A.

Final In, First Out

B.

First In, First Out

C.

Fixed Input, Fixed Output

D.

First Item, Final Order

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.

Most recent purchase

C.

Average of all purchases

D.

Highest priced purchase

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

LIFO Easy

A.

Opening stock only

B.

Earliest purchase

C.

Most recent purchase

D.

Average of all purchases

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

Methods of pricing material issues Easy

A.

FIFO

B.

ABC analysis

C.

VED analysis

D.

EOQ

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

FIFO Easy

A.

Higher cost of materials issued

B.

Negative issue cost

C.

No effect on issue cost

D.

Lower cost of materials issued

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

LIFO Easy

A.

Lower cost of materials issued

B.

No effect on issue cost

C.

Higher cost of materials issued

D.

Constant issue cost

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

FIFO Easy

A.

Most recent purchases

B.

Average purchase price

C.

Cheapest purchase

D.

Earliest purchases

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

LIFO Easy

A.

Highest purchase

B.

Average purchase price

C.

Most recent purchases

D.

Earliest purchases

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.

$10 per unit

C.

$12 per unit

D.

$22 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.

Determine the storage location

B.

Decide the reorder quantity

C.

Fix the selling price of finished goods

D.

Assign a cost to materials issued from stores

13 $Which statement about FIFO is correct?$

FIFO Easy

A.

Newest stock is issued before older stock

B.

Stock is issued at standard cost

C.

All stock is issued at average cost

D.

Oldest stock is issued before newer stock

14 $Which statement about LIFO is correct?$

LIFO Easy

A.

Oldest stock is issued before newer stock

B.

Stock is issued at market price

C.

Stock is issued at average cost

D.

Newest stock is issued before older stock

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

FIFO Easy

A.

Zero

B.

Lower

C.

Unchanged

D.

Higher

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.

EOQ and VED

C.

FIFO and LIFO

D.

LIFO and ABC

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

LIFO Easy

A.

IAS 16 (Property, Plant and Equipment)

B.

IAS 2 (Inventories)

C.

IAS 7 (Cash Flows)

D.

IFRS 15 (Revenue)

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

FIFO Easy

A.

Average price

B.

Newest lot's price

C.

Original opening price

D.

Next oldest lot's price

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

LIFO Easy

A.

Standard price

B.

Next newest lot's price

C.

Oldest lot's price

D.

Average price

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

Methods of pricing material issues Easy

A.

Estimated future cost

B.

Predetermined standard cost

C.

Replacement market price

D.

Historical purchase 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.

$3,000

B.

$3,100

C.

$2,800

D.

$2,900

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.

$1,270

C.

$1,300

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.

Weighted average method

B.

LIFO 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.

$800

B.

$750

C.

$900

D.

$1,000

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.

$1,600

B.

$1,750

C.

$1,400

D.

$1,500

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

Methods of pricing material issues Medium

A.

Issues are priced at the cost of the latest purchases

B.

Issues are priced at a periodic average cost

C.

Issues are priced at the current market cost

D.

Issues are priced at the cost of the earliest purchases

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

LIFO Medium

A.

Lower profit and lower closing stock

B.

Lower profit and higher closing stock

C.

Higher 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.

$1,440

B.

$1,320

C.

$1,350

D.

$1,380

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.

$920

D.

$940

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

Methods of pricing material issues Medium

A.

Ignores the physical flow of oldest units

B.

Always overstates reported profit

C.

Values closing stock at outdated, unrealistic prices

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.

$800

B.

$1,000

C.

$1,200

D.

$900

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.

$360

B.

$300

C.

$350

D.

$340

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

Methods of pricing material issues Medium

A.

LIFO method

B.

Replacement price method

C.

FIFO method

D.

Standard 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.

$1,700

B.

$1,650

C.

$1,800

D.

$1,750

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.

$1,360

B.

$1,440

C.

$1,400

D.

$1,320

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

Methods of pricing material issues Medium

A.

Issues reflect current replacement cost

B.

It smooths out price fluctuations in issues

C.

It reports lower profit during inflation

D.

Closing stock reflects recent, near-current prices

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.

Falling

B.

Rising

C.

Fluctuating randomly

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.

$700

B.

$550

C.

$650

D.

$600

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.

FIFO method

C.

Base stock 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.

$690

B.

$780

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.

$21,166.67

C.

$22,600

D.

$21,600

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.

$22,800

D.

$21,600

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

FIFO Hard

A.

$4,433.33

B.

$4,716.67

C.

$4,000

D.

$5,000

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

LIFO Hard

A.

$5,000

B.

$4,000

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.

$4,716.67

D.

$4,433.33

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.

$4,150

B.

$4,000

C.

$4,716.67

D.

$4,433.33

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.

$1,000, with LIFO higher

C.

$433.33, with LIFO higher

D.

$716.67, with FIFO 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.

$1,350

B.

$1,500

C.

$1,600

D.

$1,400

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.

$1,650

B.

$1,600

C.

$1,500

D.

$1,400

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.

$900

B.

$1,050

C.

$1,000

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.

$1,000

B.

$900

C.

$800

D.

$750

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.

$1,600

B.

$1,400

C.

$1,500

D.

$1,450

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

LIFO Hard

A.

LIFO is permitted provided it is disclosed in the notes

B.

LIFO is the preferred benchmark treatment under IAS 2

C.

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

D.

LIFO is permitted only for manufacturing entities

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.

Base stock

B.

Weighted average

C.

LIFO

D.

FIFO

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

LIFO Hard

A.

Leaves taxable income unchanged versus FIFO

B.

Raises taxable income by deferring recent costs

C.

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

D.

Increases closing inventory relative to FIFO

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

LIFO Hard

A.

Purchases exceed sales, building up new cost layers

B.

Physical inventory count matches book records exactly

C.

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

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 lower

B.

They are equal regardless of price movement

C.

LIFO closing stock equals the weighted average value

D.

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

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

Methods of pricing material issues Hard

A.

It assigns the oldest cost to each issue

B.

Issues are always priced at the latest purchase cost

C.

The average is computed only once at period-end

D.

A new average unit cost is recomputed after every purchase

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

Methods of pricing material issues Hard

A.

Revalued each period to current replacement cost

B.

Always the weighted average of all purchases

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 most recently purchased units, so its carrying value reflects recent (near-current) prices

B.

Closing stock consists of the oldest units, reflecting historical 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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