Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Financial Accounting – I (111) : - Question Paper

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23.
ans : (e)
cause : Machinery spares is not considered as part of inventory. All other items are included in inventory and treated as current asset.
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24.
ans : (b)
cause : Net realizable value is the estimated selling price after making adjustments.
No profit or loss arises out of pricing materials on the basis of weighted avg. price method.
Goods held for sale are known as stock-in-trade. If the market price of stock is higher than its cost price then it is valued at cost price The damaged stock if its market price is less than its cost price ,should be valued at market price.
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25.
ans : (a)
cause : FIFO method is based on the assumption that costs are charged against revenue in the order in which they occur. It means, the 1st unit in stock is the 1st unit to be out. The closing inventory consists of the units purchased last. If the prices are rising, goods are issued at lower price and closing stocks are valued at higher price. It will help to create more profit. Other inventory methods said in (b), (c), (d) and (e) are not accurate. Hence, (a) is actual
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26.
ans : (e)
cause :
FIFO
LIFO
Receipt
Issue
Balance
Receipt
Issue
Balance
1.12.2006
150×20=3000
1.12.2006
150×20=3000
3.12.2006
100×20=2000
50×20=1000
3.12.2006
100×20=2000
50×20=1000
4.12.2006
200×25=5000
50×20=1000
4.12.2006
200×25=5000
50×20=1000
200×25=5000
200×25=5000
10.12.2006
50×20=1000
10.12.2006
150×25=3750
50×20=1000
100×25=2500
100×25=2500
50×25=1250
14.12.2006
100×22=2200
100×22=2200
14.12.2006
100×22=2200
50×20=1000
15.12.2006
100×25=2500
100×22=2200
50×25=1250
21.12.2004
300×30=9000
100×22=2200
100×22=2200
300×30=9000
15.12.2006
100×22=2200
50×20=1000
25.12.2006
100×22=2200
50×25=1250
100×30=3000
200×30=6000
21.12.2006
300×30=9000
50×20=1000
26.12.2006
150×40=6000
200×30=6000
50×25=1250
150×40=6000
300×30=9000
28.12.2006
200×30=6000
150×40=6000
25.12.2006
200×30=6000
50×20=1000
50×25=1250
100×30=3000
26.12.2006
150×40=6000
50×20=1000
50×25=1250
100×30=3000
28.12.2006
150×40=6000
150×40=6000
50×20=1000
50×25=1250
50×30=1500
Value of closing stock as per FIFO = 6,000
Value of closing stock as per LIFO = 3,750
2,250
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27.

Earning:   Approval pending.