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S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:
Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.
Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.
Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.
If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory is
Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.
Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.
If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory is
- a)Rs.1,11,000
- b)Rs.1,89,000
- c)Rs.1,85,000
- d)Rs.1,59,000.
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
S Ltd. follows perpetual inventory system. On March 31 of every year, ...
Calculation of Physical Inventory Value:
1. Add the value of goods purchased but not recorded in the books:
- Rs.10,000
2. Subtract the value of goods sold but not yet delivered:
- Rs.30,000
3. Add the value of goods returned but not recorded:
+ Rs.5,000
4. Subtract the value of inventory as per books:
- Rs.1,50,000
5. Physical Inventory Value:
= Rs.1,85,000 (Option C)
Explanation:
Perpetual inventory system means that the inventory balance is continuously updated in the books as and when purchases, sales, and returns are made. However, physical stock verification is still necessary to ensure that the recorded inventory matches the actual inventory on hand.
In this case, the physical stock verification revealed three discrepancies between the recorded inventory and the actual inventory:
1. Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books. This means that the recorded inventory is understated by Rs.10,000.
2. Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered. This means that the recorded inventory is overstated by Rs.30,000.
3. Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded. This means that the recorded inventory is overstated by Rs.5,000.
To calculate the value of the physical inventory, we need to adjust the recorded inventory balance for these discrepancies. Adding the value of goods purchased but not recorded and the value of goods returned but not recorded will increase the inventory balance, while subtracting the value of goods sold but not yet delivered and the value of inventory as per books will decrease the inventory balance.
The final result is a physical inventory value of Rs.1,85,000, which is higher than the recorded inventory value of Rs.1,50,000. This means that the company has more inventory on hand than it thought, which could be a good thing if the inventory is in demand and can be sold at a profit. However, it also means that the company has been recording its inventory incorrectly, which could indicate weaknesses in its inventory control system.
1. Add the value of goods purchased but not recorded in the books:
- Rs.10,000
2. Subtract the value of goods sold but not yet delivered:
- Rs.30,000
3. Add the value of goods returned but not recorded:
+ Rs.5,000
4. Subtract the value of inventory as per books:
- Rs.1,50,000
5. Physical Inventory Value:
= Rs.1,85,000 (Option C)
Explanation:
Perpetual inventory system means that the inventory balance is continuously updated in the books as and when purchases, sales, and returns are made. However, physical stock verification is still necessary to ensure that the recorded inventory matches the actual inventory on hand.
In this case, the physical stock verification revealed three discrepancies between the recorded inventory and the actual inventory:
1. Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books. This means that the recorded inventory is understated by Rs.10,000.
2. Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered. This means that the recorded inventory is overstated by Rs.30,000.
3. Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded. This means that the recorded inventory is overstated by Rs.5,000.
To calculate the value of the physical inventory, we need to adjust the recorded inventory balance for these discrepancies. Adding the value of goods purchased but not recorded and the value of goods returned but not recorded will increase the inventory balance, while subtracting the value of goods sold but not yet delivered and the value of inventory as per books will decrease the inventory balance.
The final result is a physical inventory value of Rs.1,85,000, which is higher than the recorded inventory value of Rs.1,50,000. This means that the company has more inventory on hand than it thought, which could be a good thing if the inventory is in demand and can be sold at a profit. However, it also means that the company has been recording its inventory incorrectly, which could indicate weaknesses in its inventory control system.
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Community Answer
S Ltd. follows perpetual inventory system. On March 31 of every year, ...
Goods purchased but not entered in books should be added to the value in books. Because the stock will be present physically but not recorded in books. So add Rs.10,000
Good sold and entered in books but not yet dispatched must be added. Because the stocks are present physically but will be deducted in books as it was considered as sales. So add Rs.30,000.
Goods returned to suppliers but not recorded must be subtracted. Because the goods will not be present physically but are in books. So deduct Rs.5,000
Now,
Value of physical inventory = 1,50,000 + 10,000 + 30,000 - 5,000
= 1,85,000
Good sold and entered in books but not yet dispatched must be added. Because the stocks are present physically but will be deducted in books as it was considered as sales. So add Rs.30,000.
Goods returned to suppliers but not recorded must be subtracted. Because the goods will not be present physically but are in books. So deduct Rs.5,000
Now,
Value of physical inventory = 1,50,000 + 10,000 + 30,000 - 5,000
= 1,85,000
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S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer?
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S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer?.
S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer?.
Solutions for S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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Here you can find the meaning of S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice S Ltd. follows perpetual inventory system. On March 31 of every year, the company undertakes physical stock verification. On March 31, 2004, the value of stock as per the records differed from the value as per the physical stock. On scrutiny, the following differences were noticed:Goods purchased for Rs.10,000 were received and included in the physical stock but no entry was made in the books.Goods costing Rs.30,000 were sold and entered in the books but the stock is yet to be delivered.Goods worth Rs.5,000 are returned to the suppliers but is omitted to be recorded.If the inventory is valued in the books at Rs.1,50,000, the value of the physical inventory isa)Rs.1,11,000b)Rs.1,89,000c)Rs.1,85,000d)Rs.1,59,000.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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