Which inventory valuation method is not permitted under Ind AS 2? MCQ with Answer and Explanation

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Which inventory valuation method is not permitted under Ind AS 2?

A. FIFO

B. Specific identification

C. Weighted Average

D. LIFO

Answer: Option D

Solution (By JKSSB Mock Tests)

Ind AS 2 does not permit LIFO as an acceptable method for inventory valuation.

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

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Question #1

Schedule III of Companies Act, 2013 prescribes:

A. Format of Trial Balance

B. Format of Profit & Loss Account

C. Audit report format

D. Format of Balance Sheet and Profit & Loss Account

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Correct Answer: Option D

Explanation:
Schedule III provides the format for presentation of financial statements (Balance Sheet and Statement of Profit and Loss) for companies.

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Question #2

Which of the following is an error of principle?

A. Wages paid for installation of machinery debited to Wages Account

B. Purchase of goods recorded in purchase book but not posted to supplier's account

C. Sales of old furniture credited to Sales Account

D. Credit sale to Ram posted to Shyam's account

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Correct Answer: Option A

Explanation:
Wages for installation of machinery should be capitalised (machinery). Debiting Wages Account treats it as revenue expenditure, violating principles.

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Question #3

The 'Independence' of auditor means:

A. Auditor is a relative of management

B. Auditor can take loan from client

C. Auditor can hold shares in the client company

D. Auditor is free from any influence that could compromise professional judgment

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Correct Answer: Option D

Explanation:
Independence in mind and appearance is fundamental to audit.

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

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