Essential Book Keeping - Qp12

8 Questions | Total Attempts: 36

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Essential Book Keeping - Qp12

Questions and Answers
  • 1. 
    In order to ensure that the records are accurate, firms are obliged to carry out stock takes, either on a continual basis or annually.
    • A. 

      True

    • B. 

      False

  • 2. 
    The accounting definition of stock is much wider and will also include: (Select five)
    • A. 

      Raw material waiting to be processed

    • B. 

      Work in progress

    • C. 

      Spare parts for machines

    • D. 

      Consumable items used in the selling process

    • E. 

      Food held to be sold in your staff canteen

    • F. 

      A value for the overheads used to produce finished goods

  • 3. 
    A stock card is a record of the transactions relating to a specific part or material.
    • A. 

      True

    • B. 

      False

  • 4. 
    Companies may also have lower limits on the number of any one item that should be held, in order to minimise stock holding.
    • A. 

      True

    • B. 

      False

  • 5. 
    During a stock take, employees will physically go and count every item of stock in a particular location and record the number they have counted.
    • A. 

      True

    • B. 

      False

  • 6. 
    As a general rule, stock should be valued at the higher of the price paid, and its net realisable value.
    • A. 

      True

    • B. 

      False

  • 7. 
    Advantages of the average cost includes:  (Select four)
    • A. 

      Averaging gives a more realistic value for stock issues

    • B. 

      Can be difficult to maintain and update

    • C. 

      Any purchases at unusually high or low prices are averaged out

    • D. 

      Less volatile movements allow better comparison across periods

    • E. 

      As reset when stock drops to zero, the method will bias towards more recent prices

    • F. 

      Stock valuation will not be at any of the prices paid for the item

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