- 20 Marks
CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q5 – Inventory Differences, FIFO Valuation, Management Accounting Sources
Identify five reasons for inventory differences; prepare FIFO statement for transactions; state sources for management accounting reports.
Question
a) Inventory refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation in the near future. Inventory could be in the form of raw materials, finished goods, work in progress, among others. You are required to: Identify FIVE (5) reasons why actual inventory counted may be different from the balance in the inventory records. (5 marks)
b) The following transactions have been recorded at the Stores of Kobo Kobo Ltd. for the month of January 2022 relating to material bx.
Date Receipt Issued 2/1 1,000 units at GH¢40 per unit 5/1 600 units at GH¢45 per unit 10/1 800 units 11/1 150 units 15/1 1,200 units at GH¢42 per unit 18/1 850 units 24/1 900 units at GH¢48 per unit
You are required to: Prepare a statement clearly showing the closing balances at the end of each transaction using the FIFO method. (12 marks)
c) Management Accounting Reports aid optimum decision making when information considered in preparing the report is reliable. Information is created when data is presented in a way that has meaning to the recipient. To turn data into information, it must be processed and organised. You are required to: State TWO (2) sources from where information can be obtained for Management Accounting Reports and give ONE (1) example of each source. (3 marks)
[Total: 20 marks]
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