PRC-1 · Chapter 7 · Question 11 of 100
Which of the following is the correct journal entry to record a normal loss of inventory under a periodic inventory system?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) No journal entry is required.
Explanation
Under a periodic system, normal losses are not recorded via a separate journal entry. The cost is automatically absorbed into Cost of Sales because the missing units simply do not appear in the physical closing stock count, thereby increasing the Cost of Sales figure.
More IAS 2: Inventories MCQs
- Q13What is the correct journal entry for stock distributed as free charity under a periodic inventory system?
- Q14Which of the following correctly describes 'over-absorption' of production overheads?
- Q15A business calculates the value of its closing stock on an item-by-item basis: Item A: Cost 95,000; NRV 93,000. Item B: Cost 100,000; NRV…
- Q16Which of the following expenditures should be included in the capitalized cost of inventory?
- Q17Which of the following scenarios describes a situation where a perpetual inventory system would be MOST suitable?