A-LevelAccountingTraditional costing methods9706/12 · Feb/Mar 2025 · Q271 Mark

A business prepared its statement of profit or loss for its first year of trading. It used marginal costing to value the inventory. The finance director wants to prepare the statement, using absorption costing. What will be the effect on inventory valuation and profit for the year due to this change?

Aeffect on inventory valuation: decrease, effect on profit for the year: decrease

Beffect on inventory valuation: decrease, effect on profit for the year: increase

Ceffect on inventory valuation: increase, effect on profit for the year: decrease

Deffect on inventory valuation: increase, effect on profit for the year: increase

✓ Correct answer

D: effect on inventory valuation: increase, effect on profit for the year: increase

Oracle Prep sorts past-paper questions by topic, so you can drill Traditional costing methods and see which topics are most likely to come up next.

Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Feb/Mar 2025 Paper 1 Variant 2, question 27.

Questions and mark schemes are from past examination papers and remain the copyright of the exam board. How Oracle Prep builds its content