Deck 6: Inventory

Question 1

Using the facts from question 16 what was the profit for the year ?

A) £17000
B) £15000
C) £14000
D) £9000
E) None of the above

Answer 1

A

Question 2

Inventory is a current asset.

Answer 2

True

Question 3

Inventory is a non-current asset.

Answer 3

False

Question 4

The cost of inventory could include the cost of raw materials.

Question 5

The cost of inventory could include supervisory labour.

Question 6

Using the information in question 11 above the cost of sales using the weighted average cost basis of inventory valuation would be:

A) £4900
B) £4977
C) £5124
D) £5600
E) None of the above

Question 7

The effect of overstating closing inventory is to decrease profit.

Question 8

A business has opening inventory of 200 units which cost £5.00 per unit and during the year it bought an additional 300 units at £6.00 and 400 units at £7.00. It sold 800 units during the same period. What is the cost of the closing inventory using the first in first out method of valuation?

A) £500
B) £600
C) £700
D) £623
E) None of the above

Question 9

Inventory is a liability.

Question 10

Using the facts from question 16 what was the cash flow for the year?

A) £17000
B) £ 9000
C) £12000
D) £14000
E) None of the above

Question 11

The cost of inventory could include the cost of raw materials and labour involved in direct production.

Question 12

The cost of inventory could include marketing cost.

Question 13

The effect of overstating opening inventory is to decrease profit.

Question 14

Inventory is an expense of a period.

Question 15

A business has made a profit of £120, its opening inventory was £30, it purchases were £150 and it closing inventory was £50. All transactions were for cash. What was the total cash inflow for the period?

A) £100
B) £120
C) £250
D) £150
E) None of the above

Question 16

Cost of sales is equal to:

A) The opening inventory plus the purchases made during the year
B) The purchases made during the year
C) The opening inventory plus the purchases made less the closing inventory
D) The opening inventory plus the purchases paid for less the closing inventory
E) None of the above

Question 17

A business made a gross profit of £12000 on sales of £60000, It had £2000 in inventory at the start of the year and purchased £57000 of goods during the year. What was the cost of sales ?

A) £57000
B) £55000
C) £59000
D) £48000
E) None of the above