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

(b)
Net realizable value of inventory is the estimated selling price of it before making any adjustment
(c)
Goods held for sale are known as stock-in-trade
(d)
If the market price of stock is higher than its cost price then it is valued at cost price
(e)
The market price of damaged stock is less than its cost price, should be valued at market price.
(1 mark)
< ans >
25.
Which of the subsequent inventory evaluation methods indicates higher profits during the period of rising prices?
(a)
FIFO
(b)
LIFO
(c)
Weighted avg. cost
(d)
Simple avg. cost
(e)
Specific cost.
(1 mark)
< ans >
26.
Pioneer Company, a dealer in cosmetics, records its inventory under first-in-first-out method, so as to minimizeaccumulation of outdated stock. The opening stock as on December 01, 2006 was 150 units at the rate of Rs.20 pe
r unit. The purchases and sales made during the month were:
Purchases:
Date
No. of units
Cost price per unit
04-12-2006
200
Rs.25
14-12-2006
100
Rs.22
21-12-2006
300
Rs.30
26-12-2006
150
Rs.40
Sales:
Date
No. of units
03-12-2006
100
10-12-2006
150
15-12-2006
100
25-12-2006
200
28-12-2006
200
With effect from December 01, 2006, the company decided to change the method of inventory evaluation from theFIFO method to LIFO method. The change in the value of inventory consequent upon the change in the method of evaluation was
(a)
Increase in the value of closing stock by Rs.1,500
(b)
reduce in the value of closing stock by Rs.1,500
(c)
Increase in the value of closing stock by Rs.3,000
(d)
reduce in the value of closing stock by Rs.500
(e)
reduce in the value of closing stock by Rs.2,250.
(2 marks)
< ans >
27.
A firm has a long standing arrangement for supply of consumer durables to the employees in a public sectorundertaking on installment credit basis free of interest. The price is to be paid in 24 equal monthly installments. FromOctober to March of the accounting year the firm sold goods valued Rs.5 lakhs to the employees out of which Rs.1lakh was received as installment. If very few employees have defaulted the installments, how much of the amountsold can be taken as revenue realized?
(a)
Rs.1,00,000
(b)
Rs.5,00,000
(c)
Rs.2,50,000
(d)
Rs.1,25,000
(e)
Nil.
(1 mark)
< ans >
28.
M/s.Leo Ltd. recorded the subsequent info as on March 31, 2006:
Rs.
Stock as on April 01, 2005
–
80,000
Accounts payable as on April 01, 2005

Earning:   Approval pending.