Accounting Online Program Certification Practice Test

What is the cost of closing inventory at 30 June 20X8 for Mickey Ltd?

1. £1,110

2. £1,200

3. £1,000

4. £1,300

The correct answer is: £1,110

To determine the cost of closing inventory for Mickey Ltd at 30 June 20X8, it's essential to understand how inventory is valued and calculated. The correct answer of £1,110 indicates a precise evaluation based on the principles of accounting. In accounting, the cost of closing inventory is typically derived from assessing the value of goods that remain unsold at the end of the accounting period. This involves taking into account factors such as the cost of goods sold, purchases made during the period, and any adjustments required for losses or damages to inventory. The valuation can also follow methods like FIFO (First In, First Out), LIFO (Last In, First Out), or the weighted average method, each of which impacts how the closing inventory is calculated. In this scenario, the answer indicates that after applying the relevant method and computations, the closing inventory totals £1,110. This value reflects an accurate calculation from the company's records regarding incurred costs tied to the procurement of goods and any other adjustments that factor into the closing inventory. Additionally, correct understanding of the inventory accounting practices ensures compliance with financial reporting standards, which is critical for presenting a fair view of the company's financial position. Other answer choices may represent different calculations or assumptions that do not align