Pick the correct stock concept (account from those within brackets) - NSC Accounting - Question 2 - 2016 - Paper 1
Question 2
Pick the correct stock concept (account from those within brackets). Write the correct answer only next to each number (2.1.1-2.1.4) in the ANSWER BOOK.
2.1.1 The (... show full transcript
Worked Solution & Example Answer:Pick the correct stock concept (account 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.
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Answer
The correct answer is first-in-first-out (FIFO), as it reflects the most recent prices for closing stock.
Step 2
2.1.2 The (first-in-first-out / weighted average) method is more relevant for low cost stock items that is purchased on a more regular basis.
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Answer
The correct answer is weighted average, which is suitable for low-cost items, as it averages out the cost of items purchased over time.
Step 3
2.1.3 The (first-in-first-out / specific identification) inventory valuation method is suitable for very expensive, individually identifiable stock items.
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Answer
The correct answer is specific identification, as it tracks the actual cost of each specific item sold.
Step 4
2.1.4 The (periodic / perpetual) stock system records the cost of goods sold at the point of sales.
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Answer
The correct answer is perpetual, as it continuously updates inventory records and the cost of goods sold in real time.
