Pick the correct stock concept (insert from those within brackets) - NSC Accounting - Question 2 - 2016 - Paper 1
Question 2
Pick the correct stock concept (insert from those within brackets). Write the correct answer next to each number (2.1.1-2.1.4) in the ANSWER BOOK.
2.1.1 The (first-... show full transcript
Worked Solution & Example Answer:Pick the correct stock concept (insert 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: Weighted Average. This method evaluates the cost of inventory based on the average cost of items available during the period.
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: First-in-First-out (FIFO). This is because FIFO assumes that the oldest inventory items are sold first, which aligns with the purchasing pattern for 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.
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Answer
The correct answer is: Specific Identification. This method tracks each specific item in inventory, making it ideal for expensive items with unique identifiers.
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. In a perpetual inventory system, updates to stock levels occur in real-time as sales happen.
