Quiz 21 – Inventory – (Answers)

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  • Name – Quiz 21 – Inventory – (Answers)
  • Topic – Inventory
  • Answers with Explanation


Q1. Inventory is a/an _____ asset.

Ans. Inventory is a current asset. It is neither a liquid nor a fixed asset.


Q2.Inventory is a collective term used for a company’s raw material, work-in-progress, & _____.

Ans. Inventory or stock is a term used to describe the combination of a business’ raw materials used in production, stock work-in-progress, and finished goods.


Q3. Sale of inventory is shown in _____.

Ans. It is a direct income therefore it is shown in the trading account. Closing inventory (stock) is shown in the balance sheet.


Q4. Closing inventory is shown in _____.

Ans. It is a part of the current asset and is shown in the balance sheet.


Q5. Raw Material = 5,000, Finished Goods = 3,000, Factory Tools = 10,000, Inventory _____?

Ans. Total inventory = Raw Material + WIP + Finished Goods = 5,000 + 0 + 3,000 = 8,000.


Q6. Which of the following is not inventory?

Ans. Factory equipment is a fixed tangible asset, not a part inventory (stock).


Q7. Partially completed goods are called _____ inventory.

Ans. Partially complete means ‘not complete’. Such stock is called material work-in-progress.


Q8. Inventory is valued at cost or _____ whichever is less.

Ans. Inventory is valued at cost or NRV whichever is lower.


Q9. Inventory is only depreciated with the straight-line method.

Ans. The given statement is False. Inventory is a current asset and it cannot be depreciated.