Topic: Accounting for Cost Elements

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MI – Nov 2020 – L1 – SA – Q12 – Accounting for Cost Elements

Identify a factor that is NOT to be considered during stocktaking.

The objective of periodic stocktaking is to find out the physical quantities of all types of stocks at a given date. Which of the following is NOT a factor to be considered during stocktaking?

A. Adequate numbers of staff with clear and precise instructions

B. Period of stock take should not interfere with production

C. Adequate technical assistance should be available to identify materials

D. Great care should be taken to ensure that invalid stock items are not included

E. Quantities of each type of stocks should not be checked against stock records

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MI – Nov 2015 – L1 – SB – Q6b – Accounting for Cost Elements

Calculates cash receipts expected over three months, considering credit sales terms and bad debts.

The following information was extracted from the books of LAHA Limited:

Product P (units) Product Q (units)
November 1,500
December 2,000
January 1,000
February 2,000
March 3,000

Product P is sold for ₦200 per unit, and Product Q for ₦300 per unit. All sales are on credit. 20% of total sales are received in the month of sale, 40% in the following month, and the remaining balance (excluding bad debts) is received at the end of the second month. Bad debts are 2% of total sales and are written off at the end of the second month following sale.

Required:
Calculate the cash receipts expected in January, February, and March. (12 Marks)

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MI – Nov 2015 – L1 – SB – Q3 – Accounting for Cost Elements

Determines inventory balance using FIFO and weighted average pricing methods.

A company located in Ijora area of Lagos extracted the following figures from its materials analysis sheet:

Date Transaction Quantity Unit price (N)
1st January Balance b/f 10,000 50
25th January Receipt 7,000 55
6th February Issue 14,000
3rd March Receipt 5,000 60
27th March Receipt 4,500 62
4th June Issue 7,500
24th June Issue 2,500
30th June Receipt 6,500 65

You are required to record the above transactions in the inventory ledger and determine the value of the inventory balance at the end of June 2015 using:
a. First-in-First-out pricing method. (10 Marks)
b. Weighted average pricing method. (10 Marks)

(Total 20 Marks)

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MI – Nov 2015 – L1 – SA – Q8 – Accounting for Cost Elements

Identifies information that is not typically included in a standard store ledger card.

Which of the following information would NOT be contained in a standard store ledger card?
A. Description of the item
B. Minimum inventory level
C. Re-order quantity
D. Supplier’s address
E. Pricing method

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MI – Nov 2015 – L1 – SA – Q4 – Accounting for Cost Elements

Identifies a reason why an organization may not hold inventory.

An organisation may NOT hold inventory in order to:
A. Meet regular demands
B. Even out seasonal variation in demand
C. Act as buffer when higher demand is expected
D. Meet technical requirements of a production system
E. Take advantage of bulk purchase discounts

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MI – Nov 2015 – L1 – SA – Q3 – Accounting for Cost Elements

Identifies the term related to compensation for employees beyond the regular wage.

Which of the following terms is known as compensation beyond the regular wage?
A. Overtime
B. Incentive
C. Bonus
D. Salaries
E. Leave allowance

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MI – Nov 2021 – L1 – SA – Q10 – Accounting for Cost Elements

Identify the correct term for calculating gross pay and associated payments.

The computation of the gross pay for each employee and calculation of payments to be made to employees, government and pension funds is called:

A. Wages control accounting
B. Labour cost accounting
C. Payroll accounting
D. Direct labour accounting
E. Overhead control accounting

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MI – Nov 2021 – L1 – SA – Q3 – Accounting for Cost Element

Identify the incorrect method for updating inventory records.

Which of the following is NOT used in updating inventory records?

A. Material requisition notes
B. Material returns note
C. Material invoices
D. Goods received notes
E. Goods returned notes

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MI – May 2022 – L1 – SA – Q7 – Accounting for Cost Elements

Identifying a non-advantage of the Just-in-Time purchasing arrangement.

Which of the following is NOT an advantage of Just-in-Time purchasing arrangement?

A. Reduced investment in raw materials
B. Substantial savings in factory space
C. Low quantity discounts
D. Low investment in work-in-progress
E. Reduction in paperwork

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MI – May 2022 – L1 – SA – Q1 – Accounting for Cost Elements

Identify a cost that is not a carrying cost in inventory control from the list provided.

Which of the following is NOT a carrying cost under inventory control?

A. Warehouse rent
B. Insurance cost
C. Stores staffing cost
D. Material handling cost
E. Set up and tooling cost

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MI – Nov 2020 – L1 – SA – Q12 – Accounting for Cost Elements

Identify a factor that is NOT to be considered during stocktaking.

The objective of periodic stocktaking is to find out the physical quantities of all types of stocks at a given date. Which of the following is NOT a factor to be considered during stocktaking?

A. Adequate numbers of staff with clear and precise instructions

B. Period of stock take should not interfere with production

C. Adequate technical assistance should be available to identify materials

D. Great care should be taken to ensure that invalid stock items are not included

E. Quantities of each type of stocks should not be checked against stock records

Login or create a free account to see answers

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MI – Nov 2015 – L1 – SB – Q6b – Accounting for Cost Elements

Calculates cash receipts expected over three months, considering credit sales terms and bad debts.

The following information was extracted from the books of LAHA Limited:

Product P (units) Product Q (units)
November 1,500
December 2,000
January 1,000
February 2,000
March 3,000

Product P is sold for ₦200 per unit, and Product Q for ₦300 per unit. All sales are on credit. 20% of total sales are received in the month of sale, 40% in the following month, and the remaining balance (excluding bad debts) is received at the end of the second month. Bad debts are 2% of total sales and are written off at the end of the second month following sale.

Required:
Calculate the cash receipts expected in January, February, and March. (12 Marks)

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MI – Nov 2015 – L1 – SB – Q3 – Accounting for Cost Elements

Determines inventory balance using FIFO and weighted average pricing methods.

A company located in Ijora area of Lagos extracted the following figures from its materials analysis sheet:

Date Transaction Quantity Unit price (N)
1st January Balance b/f 10,000 50
25th January Receipt 7,000 55
6th February Issue 14,000
3rd March Receipt 5,000 60
27th March Receipt 4,500 62
4th June Issue 7,500
24th June Issue 2,500
30th June Receipt 6,500 65

You are required to record the above transactions in the inventory ledger and determine the value of the inventory balance at the end of June 2015 using:
a. First-in-First-out pricing method. (10 Marks)
b. Weighted average pricing method. (10 Marks)

(Total 20 Marks)

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MI – Nov 2015 – L1 – SA – Q8 – Accounting for Cost Elements

Identifies information that is not typically included in a standard store ledger card.

Which of the following information would NOT be contained in a standard store ledger card?
A. Description of the item
B. Minimum inventory level
C. Re-order quantity
D. Supplier’s address
E. Pricing method

Login or create a free account to see answers

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MI – Nov 2015 – L1 – SA – Q4 – Accounting for Cost Elements

Identifies a reason why an organization may not hold inventory.

An organisation may NOT hold inventory in order to:
A. Meet regular demands
B. Even out seasonal variation in demand
C. Act as buffer when higher demand is expected
D. Meet technical requirements of a production system
E. Take advantage of bulk purchase discounts

Login or create a free account to see answers

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MI – Nov 2015 – L1 – SA – Q3 – Accounting for Cost Elements

Identifies the term related to compensation for employees beyond the regular wage.

Which of the following terms is known as compensation beyond the regular wage?
A. Overtime
B. Incentive
C. Bonus
D. Salaries
E. Leave allowance

Login or create a free account to see answers

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MI – Nov 2021 – L1 – SA – Q10 – Accounting for Cost Elements

Identify the correct term for calculating gross pay and associated payments.

The computation of the gross pay for each employee and calculation of payments to be made to employees, government and pension funds is called:

A. Wages control accounting
B. Labour cost accounting
C. Payroll accounting
D. Direct labour accounting
E. Overhead control accounting

Login or create a free account to see answers

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MI – Nov 2021 – L1 – SA – Q3 – Accounting for Cost Element

Identify the incorrect method for updating inventory records.

Which of the following is NOT used in updating inventory records?

A. Material requisition notes
B. Material returns note
C. Material invoices
D. Goods received notes
E. Goods returned notes

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MI – May 2022 – L1 – SA – Q7 – Accounting for Cost Elements

Identifying a non-advantage of the Just-in-Time purchasing arrangement.

Which of the following is NOT an advantage of Just-in-Time purchasing arrangement?

A. Reduced investment in raw materials
B. Substantial savings in factory space
C. Low quantity discounts
D. Low investment in work-in-progress
E. Reduction in paperwork

Login or create a free account to see answers

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MI – May 2022 – L1 – SA – Q1 – Accounting for Cost Elements

Identify a cost that is not a carrying cost in inventory control from the list provided.

Which of the following is NOT a carrying cost under inventory control?

A. Warehouse rent
B. Insurance cost
C. Stores staffing cost
D. Material handling cost
E. Set up and tooling cost

Login or create a free account to see answers

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