PRC-1 · Chapter 7 · Question 69 of 100
When using the continuous Weighted Average Cost (AVCO) formula under a perpetual inventory system, when must a new average unit cost be calculated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) After every new purchase or receipt of inventory.
Explanation
In a continuous weighted average (perpetual) system, the average cost per unit must be recalculated every time a new delivery of goods arrives at a different price.
More IAS 2: Inventories MCQs
- Q71If an entity accidentally overstates its Closing Inventory value at the end of the period, how will this affect the financial statements?
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- Q73How does IAS 2 require trade discounts, rebates, and similar items to be treated when determining the cost of purchase for inventory?
- Q74A business imports raw materials and pays non-refundable import duties to the authorities. How are these duties treated in the financial…
- Q75In which of the following scenarios does IAS 2 require the use of the 'Specific Identification' method for assigning costs to inventory?