PRC-1 · Chapter 7 · Question 17 of 100
Which of the following scenarios describes a situation where a perpetual inventory system would be MOST suitable?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A business selling low volumes of high-value items, like a luxury car dealership.
Explanation
A perpetual system involves continuous tracking of every inventory movement. It is highly suitable (and cost-effective) for businesses dealing with high-value items where tight control and real-time data are essential.
More IAS 2: Inventories MCQs
- Q19According to IAS 2, how should unallocated fixed production overheads be treated when actual production is abnormally low?
- Q20Which of the following items is EXCLUDED from the scope of IAS 2 Inventories?
- Q21A business bought 30 cars. Under which of the following circumstances would these cars be classified as 'Inventory'?
- Q22Which of the following definitions correctly describes 'Prime Cost'?
- Q23When a business records a write-down of inventory to Net Realizable Value, where is this expense initially recognized?