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?
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. This question tests the candidate's understanding of inventory valuation within the Accountingsyllabus. The examiner's mark scheme requires...
📋 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...
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