Financial Accounting MCQ Quiz in मल्याळम - Objective Question with Answer for Financial Accounting - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക
Last updated on Mar 30, 2025
Latest Financial Accounting MCQ Objective Questions
Top Financial Accounting MCQ Objective Questions
Financial Accounting Question 1:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 4
On 1 January 20X4, Cedar Co acquired a new delivery van for $35,000. The van has an estimated useful life of 5 years and a residual value of $5,000. Cedar Co uses the straight-line method for depreciation. On 31 December 20X4, it was discovered that a minor repair to the van costing $200 had been incorrectly debited to the motor vehicles cost account instead of the repairs expense account.
(a) What amount should be recognized as depreciation for the year ended 31 December 20X4?
Answer (Detailed Solution Below) 6000
Financial Accounting Question 1 Detailed Solution
(a) Depreciation for the year ended 31 December 20X4:
-
Depreciable amount = Cost - Residual Value = $35,000 - $5,000 = $30,000
-
Annual depreciation = Depreciable amount / Useful life = $30,000 / 5 years =
$6,000
Financial Accounting Question 2:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 3
Which of the following statements is TRUE regarding the accounting for the 50 damaged units of Product X and the general impact of inventory valuation methods during a period of rising prices?
Answer (Detailed Solution Below)
Financial Accounting Question 2 Detailed Solution
The correct option is option 2
Additional Information:
Accounting for Damaged Units (IAS 2):
* IAS 2 Inventories requires that inventory be valued at the lower of cost and net realisable value (NRV).
* Cost of 50 damaged units (from 20 July purchase): 50 units * $14.00 = $700.
* Net Realisable Value (NRV) of damaged units: (Selling price $10.00 - Repair cost $2.00) * 50 units = $8.00 * 50 = $400.
* The lower of cost ($700) and NRV ($400) is $400. Therefore, the units should be recognised at $8.00 per unit (i.e. $400/50 units). The write-down of $300 ($700-$400) is recognized as an expense in the Statement of Profit or Loss.
2. Impact of Inventory Valuation Methods (Rising Prices):
* FIFO (First-In, First-Out): In a period of rising prices, FIFO assumes that the oldest (cheaper) inventory is sold first. This means that the cost of sales will be lower, and consequently, the reported profit will be higher. The closing inventory will consist of the most recently purchased (more expensive) items, leading to a higher closing inventory value and thus higher total assets.
* Weighted Average Cost (AVCO): In a period of rising prices, AVCO uses an average cost that is higher than the older costs assumed by FIFO. This results in a higher cost of sales and lower reported profit, and a lower closing inventory value and lower total assets, compared to FIFO.
Combining the two parts:
The 50 damaged units are valued at their NRV of $8.00 per unit.
In a period of rising prices, FIFO results in higher reported profit and higher total assets.
Incorrect Options Explanation:
1 & 3: These options incorrectly state that the damaged units should be recognized at cost. IAS 2 requires the lower of cost and NRV.
1 & 4: These options incorrectly state that FIFO results in lower profit and lower assets in rising prices. FIFO leads to higher profit and assets in rising price environments because older, cheaper inventory is assumed sold first.
Financial Accounting Question 3:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 2 d)
What is the correct Gross profit for Cedar Co's Statement of Profit or Loss for the year ended 31 December 20X4, when applying the periodic weighted average cost method reflecting all necessary inventory adjustments?
Answer (Detailed Solution Below) 5500
Financial Accounting Question 3 Detailed Solution
Gross Profit (Periodic Weighted Average Cost Method):
-
Sales Revenue: $15,700
-
Cost of Sales: ($10,200)
-
Gross Profit (Periodic AVCO) = $15,700 - $10,200 = $5,500
Financial Accounting Question 4:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 2 c)
What is the correct Cost of Sales for Cedar Co's Statement of Profit or Loss for the year ended 31 December 20X4, when applying the periodic weighted average cost method reflecting all necessary inventory adjustments?
Answer (Detailed Solution Below) 10200
Financial Accounting Question 4 Detailed Solution
Cost of Sales:
-
Opening Inventory: $2,400
-
Purchases: $16,150
-
Goods Available for Sale: $18,550
-
Less: Closing Inventory (calculated in Task 1b): ($8,350)
-
Cost of Sales (Periodic AVCO) = $18,550 - $8,350 = $10,200
Financial Accounting Question 5:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 2 b)
What is the correct Gross Profit for Cedar Co's Statement of Profit or Loss for the year ended 31 December 20X4, when applying the FIFO method reflecting all necessary inventory adjustments
Answer (Detailed Solution Below) 5550
Financial Accounting Question 5 Detailed Solution
Gross Profit (FIFO Method):
-
Sales Revenue: $15,700
-
Cost of Sales: ($10,150)
-
Gross Profit (FIFO) = $15,700 - $10,150 = $5,550
Financial Accounting Question 6:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 2 a)
What is the correct Cost of Sales for Cedar Co's Statement of Profit or Loss for the year ended 31 December 20X4, when applying the FIFO method reflecting all necessary inventory adjustments
Answer (Detailed Solution Below) 10150
Financial Accounting Question 6 Detailed Solution
Cost of Sales:
-
Opening Inventory: 200 units @ $12.00 = $2,400
-
Purchases: $6,750 (15 March) + $4,200 (20 July) + $5,200 (12 Nov) = $16,150
-
Goods Available for Sale: $2,400 + $16,150 = $18,550
-
Less: Closing Inventory (calculated in Task 1a): ($8,400)
-
Cost of Sales (FIFO) = $18,550 - $8,400 = $10,150
Financial Accounting Question 7:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 1 b)Calculate the value of closing inventory for Product X at 31 December 20X4 using the periodic weighted average cost method.
Answer (Detailed Solution Below) 8350
Financial Accounting Question 7 Detailed Solution
Periodic Weighted Average Cost Method
Step 1: Calculate total cost of goods available for sale:
-
(200 units × $12.00) + (500 units × $13.50) + (300 units × $14.00) + (400 units × $13.00)
-
$2,400 + $6,750 + $4,200 + $5,200 = $18,550
Step 2: Calculate total units available for sale:
-
200 + 500 + 300 + 400 = 1,400 units
Step 3: Calculate the weighted average cost per unit:
-
$18,550 / 1,400 units = $13.25 per unit
Step 4: Value closing inventory (excluding damaged units initially):
-
Closing inventory units = 650 units (calculated in Task 1a)
-
Closing inventory (before NRV adjustment) = 650 units * $13.25 = $8,612.50
Step 5: Adjust for damaged units (IAS 2 - lower of cost and NRV):
-
Cost of 50 damaged units (at weighted average cost): 50 units * $13.25 = $662.50
-
NRV of 50 damaged units: $400 (calculated in Task 1a)
-
Since NRV ($400) is lower than cost ($662.50), the damaged units should be valued at $400.
-
The write-down amount is $662.50 - $400 = $262.50.
Step 6: Final Closing Inventory Value (Periodic Weighted Average Cost Method):
-
Initial AVCO valuation: $8,612.50
-
Adjustment for damaged units: ($662.50 - $400) = ($262.50)
-
Final Closing Inventory (Periodic AVCO) = $8,612.50 - $262.50 = $8,350
Financial Accounting Question 8:
Comprehension:
Cedar Co is a trading entity that commenced operations on 1 January 20X4. The accountant is in the process of finalizing the financial statements for the year ended 31 December 20X4.
Information provided:
The following information relates to inventory movements for Product X during the year ended 31 December 20X4:
-
1 January 20X4: Opening inventory - 200 units at a cost of $12.00 per unit.
-
15 March 20X4: Purchases - 500 units at a cost of $13.50 per unit.
-
10 May 20X4: Sales - 400 units at a selling price of $20.00 per unit.
-
20 July 20X4: Purchases - 300 units at a cost of $14.00 per unit.
-
5 September 20X4: Sales - 350 units at a selling price of $22.00 per unit.
-
12 November 20X4: Purchases - 400 units at a cost of $13.00 per unit.
During the year, Cedar Co identified that 50 units of Product X, purchased on 20 July 20X4, were damaged in transit. These units could be sold for $10.00 each if an additional $2.00 per unit was spent on minor repairs. The remaining undamaged units are expected to sell at their usual selling price.
Cedar Co typically uses the First-In, First-Out (FIFO) method for valuing its inventory. However, the accountant is also considering the weighted average cost method for comparative purposes.
Task 1 a) Calculate the value of closing inventory for Product X at 31 December 20X4 using the FIFO (First-In, First-Out) method.
Answer (Detailed Solution Below) 8400
Financial Accounting Question 8 Detailed Solution
(a) FIFO (First-In, First-Out) Method
Step 1: Track inventory flow:
-
Available for sale: 200 units @ $12.00 = $2,400 (Opening)
-
Available for sale: 500 units @ $13.50 = $6,750 (15 March Purchase)
-
Available for sale: 300 units @ $14.00 = $4,200 (20 July Purchase)
-
Available for sale: 400 units @ $13.00 = $5,200 (12 November Purchase)
Step 2: Calculate units sold and remaining:
-
Total units available = 200 + 500 + 300 + 400 = 1,400 units
-
Total units sold = 400 + 350 = 750 units
-
Closing inventory units = 1,400 - 750 = 650 units
Step 3: Value closing inventory (FIFO - last in, first out remains):
-
400 units @ $13.00 (from 12 Nov purchase) = $5,200
-
250 units @ $14.00 (from 20 July purchase) = $3,500
-
Total cost = $5,200 + $3,500 = $8,700
Step 4: Adjust for damaged units (IAS 2 - lower of cost and NRV):
-
Cost of 50 damaged units: 50 units @ $14.00 (from 20 July batch) = $700
-
NRV of 50 damaged units: (50 units * $10.00) - (50 units * $2.00) = $500 - $100 = $400
-
Since NRV ($400) is lower than cost ($700), the damaged units should be valued at $400.
-
The write-down amount is $700 - $400 = $300. This $300 will be charged to the Statement of Profit or Loss.
Step 5: Final Closing Inventory Value (FIFO Method):
-
Initial FIFO valuation: $8,700
-
Adjustment for damaged units: ($700 - $400) = ($300)
-
Final Closing Inventory (FIFO) = $8,700 - $300 = $8,400
Financial Accounting Question 9:
Which of the following increases in equity accounts are shown as cash inflows in the cash flows from financing section of the statement of cash flows?
- Increase in share capital
- Increase in share premium
- Increase in revaluation surplus
- Increase in retained earnings
Answer (Detailed Solution Below)
Financial Accounting Question 9 Detailed Solution
The correct option is option 1
Additional Information:
- Only the increase in share capital and share premium from the cash issue of shares is shown as a cash inflow on the statement of cash flows.
- The increase in the revaluation surplus is a non-cash transaction and therefore is not included in the statement of cash flows.
- The increase in retained earnings is shown as profit before tax in cash flows from operating activities in the statement of cash flows.
Financial Accounting Question 10:
Comprehension:
You have been given the following information relating to a limited liability company called Nobrie. This company is preparing financial statements for the year ended 31 May 20X4.
NOBRIE
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 МАУ 20X4
| $'000 | |
| Revenue | 66,600 |
| Cost of sales | (13,785) |
| Gross profit | 52,815 |
| Distribution costs | (7,530) |
| Administrative expenses | (2,516) |
| Investment income | 146 |
| Finance cost | (1,177) |
| Profit before tax | 41,738 |
| Tax | (9,857) |
| Profit for the year | 31,881 |
| Retained earnings brought forward at 1 June 20X3 | 28,063 |
| Retained earnings carried forward at 31 May 20X4 | 59,944 |
NOBRIE
STATEMENTS OF FINANCIAL POSITION AS AT 31 MAY
| 20X4 | 20X3 | |||
| $'000 | $'000 | $'000 | $'000 | |
| Assets | ||||
| Non-current assets | ||||
| Cost | 144.844 | 114,785 | ||
| Accumulated depreciation | (27,433) | (26,319) | ||
| 117,411 | 88.466 | |||
| Current assets | ||||
| Inventory | 24,931 | 24,065 | ||
| Trade receivables | 18,922 | 13,238 | ||
| Cash | 3,689 | 2,224 | ||
| 47,542 | 39,527 | |||
| Total assets | 164.953 | 127,993 | ||
| Equity and liabilities | ||||
| Equity | ||||
| Ordinary share capital | 27,000 | 23,331 | ||
| Share premium | 14.569 | 10.788 | ||
| Revaluation surplus | 15,395 | 7,123 | ||
| Retained earnings | 59,944 | 28,063 | ||
| 116,908 | 69,305 | |||
| Non current liabilities | ||||
| 6% loan note | 17,824 | 24,068 | ||
| Current liabilities | ||||
| Bank overdraft | 5,533 | 6.973 | ||
| Trade payables | 16.699 | 20,324 | ||
| Taxation | 7,989 | 7,323 | ||
| 30,221 | 34,620 | |||
| Total equity and liabilities | 164,953 | 127,993 |
Additional information
(1) During the year ended 31 May 20X4, the company sold a piece of equipment for $3,053,000, realising a profit of $1,540,000. There were no other disposals of noncurrent assets during the year.
(2) Depreciation of $5,862,000 has been charged.
(3) There were no amounts outstanding in respect of interest payable or receivable as at 31 May 20X3 or 20X4.
(4) There were no dividends paid or declared during the year.
Required
The cash purchases of property, plant and equipment for the year ended 31 May 20Х4 is $___________
Answer (Detailed Solution Below) 28048000
Financial Accounting Question 10 Detailed Solution
PROPERTY, PLANT AND EQUIPMENT
| $'000 | $'000 | ||
| Balance b/fwd (carrying amount) | 88,466 | Disposals (carrying amount) (see working below) | 1,513 |
| Revaluation (15,395 -7,123) | 8,272 | Depreciation | 5,862 |
| Purchases (bal fig) | 28,048 | Balance c/fwd (carrying amount) | 117,411 |
| 124,786 | 124,786 |
Disposals
| $'000 | |
| Proceeds | 3,053 |
| Profit | 1,540 |
| Carrying amount of disposals | 1,513 |