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Mock Test

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Mock Test

  • This topic has 5 replies, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • June 1, 2020 at 7:47 am #572473
    victorwilson
    Participant
    • Topics: 19
    • Replies: 27
    • ☆

    Dear Mr. John

    As per your lecture method to calculate the closing inventory
    Inventory value
    Less: Purchase of Goods
    Add: Sale of Goods
    Add: Returned outwards

    But the below example says:

    The company value its inventory using FIFO method
    At 1 may 700 each $190 and below transaction:

    1 july purchased 500 engines at $ 220 each
    1 Nov Sold 400/- for $ 160000
    1 February purchased 300 engines at 230 each
    15 April sold 250 engines for $ 125000
    What is the value of closing inventory?
    50*190=9500
    500*220=110000
    300*230=69000
    Total =188500
    Here purchased added and sold of goods deducted from inventory value 700@190
    Why is opposite then then above solution?

    2.
    Opening asset 569400 at 1-01-2008
    Opening liabilities -412840 at 01-01-2008
    Capital Introduced =65000
    Drawing = 800*12= -9600
    =211960 What is name of the balance?

    AND 31-12-2008 Dec= ASSET $614130 and liabilities 369770 =244360 closing net asset

    What is the profit?

    And answer is (211960-244360) =32400 profit ?

    Need you advice for both the solution? finding complicated.

    Regards,
    Victor

    June 1, 2020 at 10:27 am #572492
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    1. Nowhere in any of my lectures do I say what you have written in your first paragraph!!
    That would be ridiculous. The inventory left at the end of the period is what was bought during the period less what was sold.

    The example you have written out is testing on the valuation of the closing inventory using the first-in-first-out method. So the 850 units that are left are valued at whatever the cost of them was on the assumption that they are the most recent purchases.

    I work through example 5 of Chapter 9 in the free lecture notes in my free lectures on that Chapter, which explains how we value inventory using FIFO.

    2. Your second example is testing on the accounting equation. The change in net assets over the period is equal to profit less drawings plus any capital introduced. I explain this in my lectures working through Chapter 2 of our free lecture notes.

    June 2, 2020 at 1:46 pm #572587
    victorwilson
    Participant
    • Topics: 19
    • Replies: 27
    • ☆

    Dear Mr. John

    Total of most resent purchase =500+300=800 and 850-800=50 calculate on opening inventory cost per unit price .I suppose it is correct

    Need conformation?

    AND

    2nd

    Opening Asset -Opening liab = Capital or Net asset ?

    Regards
    Victor

    June 2, 2020 at 4:45 pm #572600
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    Your first bit is correct.

    Net assets = assets – liabilities
    Net assets = capital

    Have you watched my free lectures on this? 🙂

    June 2, 2020 at 7:02 pm #572608
    victorwilson
    Participant
    • Topics: 19
    • Replies: 27
    • ☆

    Dear Mr. John

    I did watch .. Its perfectly understand now.

    Thank you

    victor

    June 3, 2020 at 9:18 am #572635
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘Mock Test’ is closed to new replies.

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