✅ INVENTORY VALUATION – 100 MCQs (Railway Stores Accounting)
Q1. Inventory valuation is required for:
A. Cost control
B. Financial reporting
C. Profit calculation
D. All
Q2. Closing stock is valued at:
A. Cost
B. Market price
C. Lower of cost or market
D. Higher of cost or market
Q3. FIFO assumes:
A. Latest stock issued first
B. Oldest stock issued first
C. Average stock issued
D. Random issue
Q4. LIFO assumes:
A. Old stock issued first
B. New stock issued first
C. Average issue
D. Market price
Q5. Weighted Average method gives:
A. Fixed rate
B. Fluctuating rate
C. Market rate
D. Replacement rate
Q6. Inventory valuation affects:
A. Profit
B. Assets
C. Cost
D. All
Q7. Overvaluation of closing stock leads to:
A. Understatement of profit
B. Overstatement of profit
C. No effect
D. Loss
Q8. Undervaluation of stock leads to:
A. Higher profit
B. Lower profit
C. No change
D. Asset increase
Q9. Which method is NOT used in Railways?
A. FIFO
B. LIFO
C. Weighted Average
D. Standard costing
Q10. Inventory valuation is governed by:
A. Accounting principles
B. Tax laws
C. Railway code
D. All
Q11. FIFO is suitable when prices are:
A. Falling
B. Rising
C. Constant
D. Zero
Q12. LIFO is suitable when prices are:
A. Rising
B. Falling
C. Constant
D. None
Q13. Closing stock appears in:
A. Trial balance
B. Balance sheet
C. Cash book
D. Payroll
Q14. Inventory valuation is part of:
A. Financial accounting
B. Cost accounting
C. Both
D. None
Q15. Which method smoothens price fluctuations?
A. FIFO
B. LIFO
C. Weighted average
D. Market price
Q16. Inventory includes:
A. Raw materials
B. Work-in-progress
C. Finished goods
D. All
Q17. Inventory valuation is done at:
A. Beginning
B. End
C. Periodically
D. All
Q18. Incorrect valuation affects:
A. Profit
B. Balance sheet
C. Costing
D. All
Q19. Stock valuation is required for:
A. Audit
B. Financial statements
C. Costing
D. All
Q20. Inventory valuation method must be:
A. Flexible
B. Consistent
C. Random
D. Optional
Q21. FIFO: Purchase 100 @ ₹10, 100 @ ₹20, issue 100 → issue value?
A. ₹1000
B. ₹2000
C. ₹1500
D. ₹1200
Q22. FIFO closing stock after above?
A. ₹1000
B. ₹2000
C. ₹1500
D. ₹1200
Q23. LIFO: Purchase 100 @ ₹10, 100 @ ₹20, issue 100 → issue value?
A. ₹1000
B. ₹2000
C. ₹1500
D. ₹1200
Q24. LIFO closing stock?
A. ₹1000
B. ₹2000
C. ₹1500
D. ₹1200
Q25. Weighted avg: (100×10 +100×20)/200 = ?
A. ₹15
B. ₹12
C. ₹18
D. ₹20
Q26. Issue 100 units under avg method → value?
A. ₹1500
B. ₹1200
C. ₹1000
D. ₹2000
Q27. Closing stock under avg method?
A. ₹1500
B. ₹1000
C. ₹2000
D. ₹1200
Q28. Purchase: 200 @ ₹5, 300 @ ₹10 → avg rate?
A. ₹7
B. ₹8
C. ₹6
D. ₹9
Q29. Issue 100 units → value?
A. ₹700
B. ₹800
C. ₹600
D. ₹900
Q30. FIFO: 50 @ ₹10, 50 @ ₹20, issue 60 → value?
A. ₹700
B. ₹800
C. ₹600
D. ₹900
Q31. Closing stock FIFO?
A. ₹400
B. ₹500
C. ₹600
D. ₹300
Q32. LIFO issue value (same data)?
A. ₹900
B. ₹700
C. ₹800
D. ₹600
Q33. Closing stock LIFO?
A. ₹400
B. ₹300
C. ₹500
D. ₹600
Q34. Avg rate (50@10, 50@20)?
A. ₹15
B. ₹12
C. ₹18
D. ₹20
Q35. Issue 60 → value?
A. ₹900
B. ₹600
C. ₹700
D. ₹800
Q36. Closing stock avg?
A. ₹600
B. ₹400
C. ₹700
D. ₹500
Q37. Purchase: 100 @ ₹8, 100 @ ₹12 → avg?
A. ₹10
B. ₹9
C. ₹11
D. ₹12
Q38. Issue 50 → value?
A. ₹500
B. ₹450
C. ₹550
D. ₹600
Q39. FIFO closing stock after issue?
A. ₹1200
B. ₹1000
C. ₹900
D. ₹800
Q40. LIFO closing stock?
A. ₹1200
B. ₹800
C. ₹1000
D. ₹900
Q41. 100@10, 200@20, issue 150 FIFO → value?
A. ₹2000
B. ₹2500
C. ₹3000
D. ₹1500
Q42. LIFO issue value?
A. ₹3000
B. ₹2500
C. ₹2000
D. ₹1500
Q43. Avg rate?
A. ₹16.67
B. ₹15
C. ₹18
D. ₹20
Q44. Issue value avg?
A. ₹2500
B. ₹2000
C. ₹1500
D. ₹3000
Q45. Closing FIFO?
A. ₹2500
B. ₹2000
C. ₹1500
D. ₹3000
Q46. Closing LIFO?
A. ₹1500
B. ₹2000
C. ₹2500
D. ₹3000
Q47. Closing avg?
A. ₹2500
B. ₹2000
C. ₹1500
D. ₹3000
Q48. Which method gives highest profit (rising prices)?
A. FIFO
B. LIFO
C. Avg
D. None
Q49. Lowest closing stock (rising prices)?
A. FIFO
B. LIFO
C. Avg
D. None
Q50. Weighted avg minimizes:
A. Errors
B. Fluctuation
C. Profit
D. Loss
Q51. If closing stock is overvalued by ₹10,000, profit will be:
A. Understated by ₹10,000
B. Overstated by ₹10,000
C. Unaffected
D. Doubled
Q52. If opening stock is undervalued, current year profit will be:
A. Overstated
B. Understated
C. No change
D. Doubled
Q53. Purchase: 100 units @ ₹10, freight ₹200 total → cost per unit?
A. ₹10
B. ₹12
C. ₹11
D. ₹13
Q54. Which cost is included in inventory valuation?
A. Freight
B. Purchase cost
C. Handling charges
D. All
Q55. Trade discount is:
A. Added to cost
B. Deducted from cost
C. Ignored
D. Doubled
Q56. Cash discount is:
A. Included in cost
B. Deducted from cost
C. Ignored in inventory valuation
D. Added twice
Q57. Purchase: 200 units @ ₹50, discount 10% → effective price?
A. ₹50
B. ₹45
C. ₹40
D. ₹55
Q58. Inventory valuation principle is based on:
A. Prudence
B. Consistency
C. Cost concept
D. All
Q59. Which stock is valued at lower price?
A. Normal stock
B. Obsolete stock
C. Fresh stock
D. Standard stock
Q60. Obsolete stock is valued at:
A. Cost
B. Market price
C. Net realizable value
D. Replacement cost
Q61. Purchase: 100 units @ ₹20, damaged 10 units → effective cost per unit?
A. ₹20
B. ₹22.22
C. ₹18
D. ₹25
Q62. Loss of stock due to fire is treated as:
A. Asset
B. Expense
C. Income
D. Liability
Q63. FIFO method assumes:
A. Physical flow of goods
B. Cost flow assumption
C. Market valuation
D. Random issue
Q64. LIFO method results in:
A. Higher profit (rising prices)
B. Lower profit (rising prices)
C. Same profit
D. No effect
Q65. Weighted average method is useful when:
A. Prices fluctuate widely
B. Prices remain fixed
C. No purchases
D. No issues
Q66. Purchase: 100 units @ ₹10, 100 units @ ₹20, issue 150 (FIFO) → closing stock?
A. ₹500
B. ₹1000
C. ₹1500
D. ₹2000
Q67. Same data under LIFO → closing stock?
A. ₹500
B. ₹1000
C. ₹1500
D. ₹2000
Q68. Weighted average closing stock (same data)?
A. ₹750
B. ₹1000
C. ₹1500
D. ₹2000
Q69. Inventory valuation affects:
A. Gross profit
B. Net profit
C. Balance sheet
D. All
Q70. Purchase returns are:
A. Added to stock
B. Deducted from stock
C. Ignored
D. Doubled
Q71. Freight inward is:
A. Expense
B. Added to inventory cost
C. Ignored
D. Income
Q72. Storage cost is:
A. Included in cost
B. Excluded from cost
C. Added partially
D. Ignored
Q73. Inventory valuation method once chosen should be:
A. Changed yearly
B. Consistent
C. Random
D. Ignored
Q74. Purchase: 100 units @ ₹30, tax ₹300 → cost per unit?
A. ₹30
B. ₹33
C. ₹36
D. ₹35
Q75. GST is included in inventory cost when:
A. ITC available
B. ITC not available
C. Always
D. Never
Q76. Inventory valuation is required at:
A. Beginning only
B. End only
C. Both
D. Never
Q77. Closing stock is shown in:
A. Profit & Loss
B. Balance sheet
C. Both
D. Cash book
Q78. Purchase: 200 units @ ₹5, issue 100 FIFO → closing stock?
A. ₹500
B. ₹1000
C. ₹750
D. ₹600
Q79. Purchase: 100 @ ₹10, 200 @ ₹20, issue 100 (LIFO) → closing?
A. ₹4000
B. ₹3000
C. ₹2000
D. ₹1000
Q80. Inventory turnover depends on:
A. Cost
B. Sales
C. Stock
D. All
Q81. If stock is undervalued by ₹5,000, next year profit will be:
A. Understated
B. Overstated
C. No effect
D. Doubled
Q82. Purchase: 100 units @ ₹10, 100 @ ₹20 → avg rate?
A. ₹15
B. ₹12
C. ₹18
D. ₹20
Q83. Issue 50 units avg → value?
A. ₹750
B. ₹500
C. ₹1000
D. ₹600
Q84. Closing stock avg?
A. ₹1500
B. ₹1000
C. ₹750
D. ₹1200
Q85. Inventory valuation helps in:
A. Cost control
B. Profit analysis
C. Decision making
D. All
Q86. Purchase: 100 units @ ₹50, 50 units damaged → effective cost?
A. ₹50
B. ₹100
C. ₹75
D. ₹60
Q87. FIFO method gives closing stock near:
A. Market value
B. Cost
C. Replacement cost
D. Zero
Q88. LIFO method gives closing stock:
A. Latest price
B. Oldest price
C. Average price
D. Market price
Q89. Inventory valuation affects:
A. Working capital
B. Liquidity
C. Profit
D. All
Q90. Purchase: 300 units @ ₹6, 100 units @ ₹18 → avg rate?
A. ₹9
B. ₹10
C. ₹12
D. ₹8
Q91. Issue 200 units avg → value?
A. ₹1800
B. ₹2000
C. ₹1600
D. ₹1500
Q92. Closing stock avg?
A. ₹1800
B. ₹2000
C. ₹1600
D. ₹1500
Q93. Inventory valuation must be:
A. Accurate
B. Consistent
C. Reliable
D. All
Q94. Purchase: 100 units @ ₹20, 100 @ ₹40, issue 100 FIFO → value?
A. ₹2000
B. ₹3000
C. ₹4000
D. ₹1000
Q95. Closing FIFO?
A. ₹4000
B. ₹3000
C. ₹2000
D. ₹1000
Q96. LIFO issue value?
A. ₹4000
B. ₹3000
C. ₹2000
D. ₹1000
Q97. Closing LIFO?
A. ₹2000
B. ₹3000
C. ₹4000
D. ₹1000
Q98. Inventory valuation error affects:
A. One year
B. Two years
C. Three years
D. None
Q99. Inventory valuation ensures:
A. True profit
B. True assets
C. Correct costing
D. All
Q100. Inventory valuation is backbone of:
A. Financial accounting
B. Cost accounting
C. Stores accounting
D. All
✅ ANSWER KEY (1–100)
1-D, 2-C, 3-B, 4-B, 5-B
6-D, 7-B, 8-B, 9-B, 10-D
11-B, 12-A, 13-B, 14-C, 15-C
16-D, 17-D, 18-D, 19-D, 20-B
21-A, 22-B, 23-B, 24-A, 25-A
26-A, 27-A, 28-B, 29-B, 30-A
31-A, 32-A, 33-B, 34-A, 35-A
36-A, 37-A, 38-A, 39-A, 40-B
41-B, 42-A, 43-A, 44-A, 45-A
46-A, 47-A, 48-A, 49-B, 50-B
51-B, 52-A, 53-B, 54-D, 55-B
56-C, 57-B, 58-D, 59-B, 60-C
61-B, 62-B, 63-B, 64-B, 65-A
66-A, 67-B, 68-A, 69-D, 70-B
71-B, 72-B, 73-B, 74-B, 75-B
76-C, 77-C, 78-A, 79-A, 80-D
81-B, 82-A, 83-A, 84-A, 85-D
86-B, 87-A, 88-B, 89-D, 90-A
91-A, 92-A, 93-D, 94-A, 95-A
96-A, 97-A, 98-B, 99-D, 100-D
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