Accounting Online Program Certification Practice Test

What should be reported as inventory for Crocodile plc given the available details of products A and B?

1. £68,800

2. £50,000

3. £55,000

4. £70,000

The correct answer is: £68,800

To determine the inventory value for Crocodile plc, it is essential to consider the valuation method applied and the details provided for products A and B. The inventory is typically valued at the lower of cost or net realizable value (NRV). If the calculated inventory value is £68,800, this figure likely represents the aggregate cost of both products A and B when evaluated based on the chosen accounting policies. For instance, if product A has a cost associated with it of £40,000 and product B has a cost of £28,800, their combination would contribute to the total inventory value of £68,800. This amount aligns with conventional accounting principles, which dictate that businesses should not overstate their inventory value. Thus, the final value indicates that the costs associated with products A and B were appropriately tallied without exceeding their potential selling prices. Other figures such as £50,000, £55,000, and £70,000 could arise from different interpretations or mistakes in calculations. They might not comply with the accurate costs incurred in producing or procuring the inventory or might reflect a misjudgment in the valuation approach. For example, if the cost of one or both products was miscalculated, that could lead to lower