PRC-1 · Chapter 7 · Question 6 of 100
Which of the following cost measurement formulas is explicitly NOT permitted under IAS 2?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Last in, First out (LIFO)
Explanation
IAS 2 prohibits the use of the LIFO method because it often matches current revenues against outdated inventory costs, failing to accurately represent the physical flow of goods and current asset values.
More IAS 2: Inventories MCQs
- Q8The following data relates to ABC Enterprises: Opening Stock Rs. 25,000; Purchases Rs. 500,000; Sales Rs. 525,000. The business…
- Q9A company has the following production data: Variable production overheads Rs. 350,000; Fixed production overheads Rs. 525,000; Normal…
- Q10During a period of rising prices (inflation), how will the valuation of closing inventory using the Weighted Average Cost (AVCO) method…
- Q11Which of the following is the correct journal entry to record a normal loss of inventory under a periodic inventory system?
- Q12What is the correct journal entry for stock distributed as free charity under a perpetual inventory system?