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CONCEPTS Pick the correct stock concept (choose from those within brackets) - NSC Accounting - Question 2 - 2016 - Paper 1
Question 2
CONCEPTS Pick the correct stock concept (choose from those within brackets). Write the correct answer only next to each number (2.1.1-2.1.4) in the ANSWER BOOK. 2.1... show full transcript
Worked Solution & Example Answer:CONCEPTS Pick the correct stock concept (choose from those within brackets) - NSC Accounting - Question 2 - 2016 - Paper 1
Step 1
2.1.1 The (first-in-first-out / weighted average) stock valuation method will record closing stock at the most current stock prices.
Answer
The correct answer is (weighted average). This method averages the cost of stock over time, reflecting the most recent inventory costs more accurately than FIFO.
Step 2
2.1.2 The (first-in-first-out / weighted average) method is more relevant for low-cost stock items that are purchased on a more regular basis.
Answer
The correct answer is (first-in-first-out). This method ensures that older inventory is sold first, which is practical for managing low-cost items.
Step 3
2.1.3 The (first-in-first-out / specific identification) inventory valuation method is suitable for very expensive, individually identifiable stock items.
Answer
The correct answer is (specific identification). This method tracks each item individually, making it ideal for expensive stock.
Step 4