SSC CGL Finance – Valuation of Inventories – Level 1 · Warm-up

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SSC CGL Finance – Valuation of Inventories – Level 1 · Warm-up – 12 questions, subject: Finance & Economics (Tier II Paper III). Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
Which of the following is NOT an inventory of a manufacturing firm?

Correct Answer: D [Machinery used to make its products]

Explanation:

Machinery is property, plant and equipment (AS 10), not an asset held for sale or consumption in production.

2.  
Net realisable value is the estimated selling price less:

Correct Answer: C [Estimated costs of completion and costs necessary to make the sale]

Explanation:

Answer: Estimated costs of completion and costs necessary to make the sale. AS 2 para 3.2.

3.  
Which cost is NOT included in the cost of inventories?

Correct Answer: A [Selling and distribution costs]

Explanation:

AS 2 para 13 excludes selling costs.

4.  
In determining the cost of purchase, trade discounts are:

Correct Answer: B [Deducted]

Explanation:

Answer: Deducted. AS 2 para 7.

5.  
For ordinarily interchangeable items, AS 2 names the cost formulas:

Correct Answer: A [FIFO or weighted average]

Explanation:

Answer: FIFO or weighted average. AS 2 para 16.

6.  
Specific identification of cost is used for:

Correct Answer: C [Items not ordinarily interchangeable]

Explanation:

AS 2 para 14 – e.g. goods made for a specific project.

7.  
When prices are rising, closing stock is highest under:

Correct Answer: D [FIFO]

Explanation:

FIFO leaves the latest (highest) prices in stock.

8.  
In a perpetual inventory system, the stock record is:

Correct Answer: B [Updated after every receipt and issue]

Explanation:

That is what 'perpetual' means.

9.  
Fill in the blankInventories are usually written down to NRV on an ______ basis.

Correct Answer: C [item-by-item]

Explanation:

Answer: item-by-item. AS 2 para 21.

10.  
If closing stock is overvalued, the current year's profit is:

Correct Answer: A [Overstated]

Explanation:

Higher closing stock lowers cost of goods sold.

11.  
Freight inward on goods purchased is:

Correct Answer: D [Included in the cost of inventories]

Explanation:

It brings goods to their present location.

12.  
Which of the following is outside the scope of AS 2?

Correct Answer: B [Work in progress under construction contracts]

Explanation:

Construction contract WIP is excluded (para 1).

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Finance & Economics (Tier II Paper III) book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-finance-economics

📘 SSC CGL 2026 – General Studies – Finance & Economics (Tier II Paper III)
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