In Trading Account, closing stock is valued at: MCQ with Answer and Explanation

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In Trading Account, closing stock is valued at:

A. Market price or cost, whichever is higher

B. Cost or net realizable value, whichever is lower

C. Market price only

D. Cost only

Answer: Option B

Solution (By JKSSB Mock Tests)

As per the prudence concept and AS 2, closing stock is valued at cost or net realizable value, whichever is lower.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Practice More Accountancy and Book Keeping Questions

Question #1

A 'Cheque issued but not presented' causes:

A. Both equal

B. Overdraft in passbook

C. Passbook balance lower than cash book

D. Cash book balance lower than passbook

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Correct Answer: Option D

Explanation:
Unpresented cheque means cash book already reduced, but passbook not reduced, so passbook balance higher.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

The concept of 'Matching Principle' implies that:

A. Debits must always equal credits

B. Assets should match liabilities

C. Expenses of a period must be matched with revenues of the same period

D. Cash inflows must match cash outflows

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Correct Answer: Option C

Explanation:
The matching concept ensures that all expenses incurred to earn a specific revenue are recognized in the same accounting period to find the true profit.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

The 'Break-Even Point' in units is calculated as:

A. Fixed cost / Variable cost per unit

B. Profit / Sales

C. Sales / Contribution per unit

D. Fixed cost / Contribution per unit

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Correct Answer: Option D

Explanation:
BEP (units) = Fixed Costs / (Selling price per unit - Variable cost per unit) = Fixed Cost / Contribution per unit.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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