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Inventory valuation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Inventory valuation

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • May 16, 2022 at 5:27 am #655783
    jermy01
    • Topics: 36
    • Replies: 22
    • ☆☆

    If an entity uses the continuous weighted average cost method to value closing inventory,
    Which of the following statements is true?

    A Unit average cost is recalculated each time there is a purchase of inventory
    B Unit average cost is calculated once only at the end of an accounting period
    C Unit average cost is recalculated each time there is a sale of goods
    D Unit average cost is recalculated each time there is a purchase or a sale

    kit says the answer is A.
    But I think the answer is C. We calculate cost per unit in continuous weighted average, each time there is a sale of goods
    please correct me sir, if I’m wrong

    May 16, 2022 at 6:17 am #655790
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49902
    • ☆☆☆☆☆

    The answer is indeed A.

    The cost is recalculated every time there is a new purchase. It is only when there is new purchase that the cost is going to be different.

    Have you watched my free lectures on this?

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