PRC-1 · Chapter 7 · Question 49 of 100
An entity has an opening stock of Rs. 120,000, purchases of Rs. 253,000, and purchase returns of Rs. 8,000. Total sales were Rs. 285,250 (which includes Rs. 35,250 of goods sold at a discount). The normal margin is 20% on sales. Goods lost by fire (abnormal loss) cost Rs. 8,000. What is the value of closing inventory? (Assuming normal sales COGS = 200,000 and discounted sales COGS = 30,000)
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 127,000
Explanation
Goods Available = 120,000 (Open) + 253,000 (Pur) - 8,000 (Ret) = 365,000. Less Abnormal Loss (8,000) = 357,000. Less Total COGS (200,000 + 30,000 = 230,000). Closing Stock = 357,000 - 230,000 = Rs. 127,000.
More IAS 2: Inventories MCQs
- Q51According to IAS 2, how is 'Net Realizable Value' (NRV) defined?
- Q52Which of the following cost measurement formulas is explicitly NOT permitted under IAS 2 for valuing inventory?
- Q53What is the underlying assumption of the First in, First out (FIFO) cost formula?
- Q54How should fixed production overheads be allocated to inventory if the actual production level is abnormally low during a period?
- Q55How must the cost of abnormal wastage of materials and labor be treated under IAS 2?