AAT L3 Management Accounting (Costing) 5

Question 1

Which inventory valuation method issues inventory at the cost of the oldest batch held?

Accepted Answer

First In First Out (FIFO)

Answer

Last In First Out (LIFO)

Answer

Weighted Average Cost (AVCO)

Answer

Standard cost

Question 2

Under FIFO during a period of rising prices, closing inventory is valued at:

Accepted Answer

The most recent (highest) purchase prices

Answer

The lowest possible cost

Answer

An average of all purchase prices

Answer

The standard cost per unit

Question 3

The weighted average cost (AVCO) method recalculates the average cost:

Accepted Answer

After every receipt of goods into inventory

Answer

Only at the end of each month

Answer

Only when issuing goods

Answer

Annually at the year-end stocktake

Question 4

Which costing method is NOT permitted under IAS 2 for the valuation of inventories?

Accepted Answer

LIFO

Answer

FIFO

Answer

AVCO

Answer

Standard cost

Question 5

Material requisition notes are used to:

Accepted Answer

Request the issue of materials from stores to production

Answer

Order goods from an external supplier

Answer

Record the delivery of goods from a supplier

Answer

Authorise payment to a supplier

Question 6

The purpose of a stores ledger card (bin card) is to:

Accepted Answer

Track the physical quantity of inventory held for each inventory item

Answer

Record financial transactions with suppliers

Answer

Record the cost price of purchases only

Answer

Calculate the VAT on purchases