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

Which of the subsequent items is/are covered under Accounting Standard-2 with regard to accounting for inventory?
I. Financial instruments held as stock-in-trade.
II. Work in progress arising under construction contracts.
III. Work in progress of service providers.
IV. Work in progress of a manufacturing industry.
(a)
Only (I) above
(b)
Only (IV) above
(c)
Both (I) and (II) above
(d)
Both (III) and (IV) above
(e)
(II), (III) and (IV) above.
(1 mark)
< ans >
20.
Physical stock of a company was taken on April 07, 2006, a week after the end of the accounting year March 31, 2006when the value of stock was obtained to be Rs.35,000.
Additional information:
i. Goods costing Rs.5,000 were sold during the week.
ii. Goods held on consignment basis amounting to Rs.4,000 included in the value of stock.
iii. Goods earlier purchased but returned during the period amounted to Rs.1,000.
iv. Goods earlier purchased but not received Rs.6,000.
After considering the above, the value of stock held as on March 31, 2006 was
(a)
Rs.27,000
(b)
Rs.19,000
(c)
Rs.43,000
(d)
Rs.51,000
(e)
Rs.35,000.
(2 marks)
< ans >
21.
Cost of conversion is made of
(a)
Direct material plus direct wages plus production overhead
(b)
Direct wages plus all kinds of overhead
(c)
Direct wages plus production overhead plus direct expenses
(d)
Direct material plus direct wages plus direct expenses plus production overhead
(e)
Direct material plus direct wages plus all kinds of overhead.
(1 mark)
< ans >
22.
Which of the subsequent methods of evaluation of inventory is based on the assumption that costs are charged againstrevenue in the order in which they occur?
(a)
FIFO method
(b)
LIFO method
(c)
Weighted avg. method
(d)
Moving avg. method
(e)
Base stock method.
(1 mark)
< ans >
23.
Which of the subsequent items is generally not considered as part of inventory?
(a)
Raw-material
(b)
Work-in-process
(c)
Consumables
(d)
Loose tools
(e)
Machinery spares.
(1 mark)
< ans >
24.
Which of the subsequent is false?
(a)
No profit or loss arises out of pricing materials on the basis of weighted avg. price method of inventory

Earning:   Approval pending.