ACCA FA · Chapter 5 · Question 9 of 10
What is the double entry to record closing inventory at the end of an accounting period?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Inventory (statement of financial position); Credit Cost of sales (statement of profit or loss)
Explanation
Closing inventory is an asset carried forward, so it is debited to the inventory account in the statement of financial position. The credit reduces cost of sales, because these goods have not yet been sold. In the next period the opening inventory is transferred back to cost of sales.
More Inventory (IAS 2) MCQs
- Q1According to IAS 2 Inventories, how should inventories be measured?
- Q2Which of the following costs should NOT be included in the cost of inventory under IAS 2?
- Q3A business holds 40 units of an item that cost $850 each. The items can be sold for $900 each, but each unit first needs modifications…
- Q4A business has three product lines in inventory at its year end: Product X: cost $2,400, NRV $3,100 Product Y: cost $5,600, NRV $4,900…
- Q5A business had the following inventory movements in March: 1 March: opening inventory 100 units at $5.00 4 March: purchased 200 units at…