CAF-5 · Chapter 1 · Question 9 of 10
In the absence of specific information regarding inventory valuation policy in a manufacturing scenario, which basis is generally assumed for closing inventory valuation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) First-In-First-Out (FIFO)
Explanation
The study text explicitly states that in the absence of specific information, we always assume the "first in-first out" (FIFO) basis for closing inventory valuation.
More Inventory Valuation MCQs
- Q1During the material procurement process, which document is prepared by the Store / Warehouse and sent to the Procurement / Purchase…
- Q2Which of the following documents is used to record the transfer of raw materials from the warehouse to the production department?
- Q3What is the primary purpose of maintaining a "bin card" by the storekeeper?
- Q4According to IAS 2, at what value should an entity carry its inventories in the financial statements at the end of a reporting period?
- Q5How is the Net Realisable Value (NRV) of an inventory item calculated?