B.COM AFM-1 (Accounting-Valuation Of Inventories) MCQ's




Question 1 :
By-products, wastes and spares are to be valued at net realisable value if their value is not material.

  1. TRUE
  2. FALSE
  

Question 2 :
AS 2 is not applicable to mineral oils.

  1. TRUE
  2. FALSE
  

Question 3 :
Following is not an inventory

  1. Spare Parts
  2. Finished Goods
  3. Raw Material
  4. WIP
  

Question 4 :
Direct costing approach for costing inventories has been eliminated.

  1. TRUE
  2. FALSE
  

Question 5 :
_____ method is recognised by AS–2.

  1. LIFO
  2. None of the above
  3. Both (a) and (d)
  4. FIFO
  

Question 6 :
Under periodic inventory system, closing stock is valued

  1. By actually counting the stock on a particular date
  2. From the stores ledger
  3. By deducting value of sales from value of purchases
  4. On estimate basis
  

Question 7 :
Machinery spare parts are included in inventories.

  1. TRUE
  2. FALSE
  

Question 8 :
Weighted Average method can be used under

  1. Only periodic inventory system
  2. Periodic and perpetual inventory systems
  3. Only perpetual inventory system
  4. None of the above
  

Question 9 :
Assets held for sale in the normal course of business are inventories.

  1. TRUE
  2. FALSE
  

Question 10 :
Inventories include machinery.

  1. TRUE
  2. FALSE
  

Question 11 :
Inventories are defined as _____ (AS–2 (Revise)).

  1. Current Liability
  2. Assets held for sale in the ordiniary course of business
  3. asset
  4. Non of the above
  

Question 12 :
As per AS–2, cost of inventories should include

  1. All cost of purchases
  2. All cost of purchase, cost of conversion and cost incurred to bring the inventory to the present location
  3. Cost of purchases and selling
  4. Cost of purchases and transport on sale
  

Question 13 :
Undervaluation of stock deflates profit.

  1. TRUE
  2. FALSE
  

Question 14 :
AS–2 (Revised) is applicable to all enterprises.

  1. TRUE
  2. FALSE
  

Question 15 :
Overvaluation of stock _____ profits.

  1. Minimise
  2. Inflates
  3. None of the above
  4. Deflates
  

Question 16 :
As per AS–2 (Revised) ____ approach for costing inventories has been eliminated.

  1. Direct labour
  2. Factory overheads
  3. Direct, costing,
  4. All of the above
  

Question 17 :
AS–2 is not applicable to _____ _____.

  1. Mineral Oils
  2. Machinery Spares
  3. Live stock
  4. None of the above
  

Question 18 :
AS–2 defines inventory as

  1. Current assets
  2. Current liabilities
  3. Fixed assets
  4. Assets held for sale in the ordinary course of business
  

Question 19 :
Valuation of Inventory should be done at

  1. Net realisable value
  2. Fair market value
  3. Present value
  4. Replacement value
  

Question 20 :
Cost of purchase does not include duties and taxes.

  1. TRUE
  2. FALSE
  

Question 21 :
Cost of inventory should include

  1. Purchase price and cost incurred to bring the inventory to present location
  2. Purchase price only
  3. Freight only
  4. Cost of conversion only
  

Question 22 :
Inventory covers

  1. WIP in construction work
  2. Biological Assets
  3. WIP in service organisation
  4. None of the above
  

Question 23 :
As per AS 2 inventories include investment held as stock by a finance company.

  1. TRUE
  2. FALSE
  

Question 24 :
While calculating cost of inventory abnormal loss of material

  1. Should not be included in cost of inventories
  2. Should be added to cost of inventories
  3. Should be deducted from cost of inventories
  4. None of the above
  

Question 25 :
As per AS–2, cost of inventories should exclude

  1. Direct labour
  2. Interest on loans
  3. Factory overheads
  4. Cost of designing the product
  

Question 26 :
Under perpetual inventory system inventory is valued

  1. Continuously
  2. Periodically
  3. Annually
  4. Quarterly
  

Question 27 :
Inventory consists of finished goods held for sale in the _____ course of business.

  1. ordinary
  2. Legal
  3. None of the above
  4. Compulsory
  

Question 28 :
As per AS–2 (Revised) Inventories are defined as an asset.

  1. TRUE
  2. FALSE
  

Question 29 :
Inventories are valued at _____ of cost and net realisable value.

  1. lower
  2. Upper
  3. Exact
  4. None of the above
  

Question 30 :
As per AS–2, inventory covers

  1. Machinery spares
  2. WIP in case of service providers
  3. Materials or suppliers used in production
  4. Stock of mineral oil
  
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