Accounting Online Program Certification Practice Test

What is the closing inventory value of Goldberg plc at 31 December 20X1?

1. £78,800

2. £70,000

3. £55,000

4. £90,000

The correct answer is: £78,800

To determine the closing inventory value for Goldberg plc at 31 December 20X1, it’s crucial to understand how inventory is valued and the methods typically used in accounting. The closing inventory reflects the value of goods that remain unsold at the end of the accounting period and is integral for calculating the cost of goods sold and subsequently the company's profitability. The calculation would typically involve assessing the inventory counts at the end of the period and applying a valuation method such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out), or perhaps the weighted average cost method. The correct inventory figure, in this case, indicates that the ending inventory of £78,800 aligns with these inventory valuation principles. This value suggests that the methodology used to arrive at this inventory calculation was appropriately applied, considering aspects such as the purchase costs, sales made during the period, and any inventory write-downs necessary due to obsolescence or market value decrease. Understanding the relevance of accurate inventory valuation, particularly how it impacts financial health and reporting, strengthens the significance of the reported £78,800 as a representative closing inventory figure for Goldberg plc as of that specific date.