A-LevelAccountingInventory ValuationMay/June 2022Paper 1 Q221 Mark

The cost of direct materials is increasing. What is the effect if a business uses first-in-first-out (FIFO) instead of average cost (AVCO) for inventory valuation in this situation?

Q: What topic does this question test?

This question tests Inventory Valuation in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Acost of sales: increases, profit for the year: decreases, closing inventory value: increases

Bcost of sales: increases, profit for the year: decreases, closing inventory value: decreases

Ccost of sales: decreases, profit for the year: increases, closing inventory value: decreases

Dcost of sales: decreases, profit for the year: increases, closing inventory value: increases

✓ Correct Answer

The correct answer is D: cost of sales: decreases, profit for the year: increases, closing inventory value: increases

📋 Examiner Report & Trap Analysis

Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...

🎯 Mark Scheme Breakdown

Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.

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About This A-Level Accounting Question

Topic

This multiple-choice question tests Inventory Valuation in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Source

This question appeared in the Cambridge A-Level Accounting May/June 2022 examination, Paper 1 Variant 2.

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