Accounting Online Program Certification Practice Test

What was the value of the closing inventory for Stacks plc after adjustments?

1. £58,200

2. £60,600

3. £58,000

4. £62,200

The correct answer is: £60,600

To determine the closing inventory value for Stacks plc after adjustments, it's important to consider how closing inventory is typically calculated. It involves taking into account the opening inventory, purchases made during the period, and subtracting any cost of goods sold (COGS). Adjustments might also include factors like inventory write-offs for damaged or obsolete stock. The value £60,600 suggests that after all necessary adjustments—such as accounting for any unsold stock and ensuring that valuations are reflective of market conditions—this figure represents the correct valuation. If the calculations involved considerations such as market value adjustments or shrinkage, the figure of £60,600 indicates a thorough reconciliation of physical inventory counts versus the accounting records, ensuring that the balance sheet accurately reflects the inventories available for sale at the end of the accounting period. This approach of closely analyzing and adjusting the inventory value aligns with generally accepted accounting principles, which emphasize the importance of accurate inventory valuation in safeguarding financial statements. Thus, concluding with £60,600 reflects a nuanced understanding of these principles and provides a reliable view of Stacks plc's financial health.