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Changes in Price Accounting MCQ - Sy M Com
Changes in Price Accounting MCQ - Sy M Com
1. The increase of decrease in the prices of various goods and services over a period of
time is known as----------------------
Answer: a) Increase and decrease in the price of various goods and service is
known as price level changes.
2. Increase in the price of various goods and services over a period of time is known as ----
------------------------
Answer: b) Increase in the price of various goods and service over a period
of time known as Inflation.
3. Decrease in the price of various goods and services over a period of time is known as ---
-------------------------
Answer: c) Decrease in the price of various goods and service over a period
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a) Increases
b) Decreases
c) Does not change
5. Prices of goods and services may increase due to following -------------- demand pull
inflation factors
a) Increases
b) Decreases
c) Does not change
Answer: c) Increases- Dering deflation since the prices of goods have come
down, more units can be purchased with the same quantity of money, hence
the purchasing power of money is said to be increasing.
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7. Accounting for price level changes may also be sometimes called as ---------------
a) Deflation Accounting
b) Inflation Accounting
c) None of the above
8. One of the limitation due to which changes in price accounting is not recommended is --
----------------------
a) Historical cost
b) Current market value
c) Realizable value
11. Prices of goods and services may increase due to following -------------- demand factors
12. Price for changes accounting can be done by the following method--------------
13. Prices of goods and services may increase due to following -------------- Supply factors
14. Prices of goods and services may increase due to following -------------- cost push
inflation factors
15. One of the main reasons to adopt changes in price accounting is--------------
16. For the following particulars of XYZ LTD what will be value of closing inventory
under Current Purchasing Power Method (CPP) if FIFO method is followed:
Opening Stock – Rs 90000/-
Purchase - Rs 20000/-
Closing Stock - Rs. 40000/- ( Rs10000/- worth stock purchased on last day )
Price Index in the beginning of the year – 80
Price Index at the end of the year - 100
Average Price Index - 90
a) Rs. 44444/-
b) Rs. 33333/-
c) Rs. 46111/-
Answer: c) Rs 46111/-
17. Current purchasing power method involves adjustment of historic figures at the current
purchasing value. Under this method historical figures are multiplied with the ------------
18. A building which was purchased in the year 2001 was recorded as 80 Lakhs when the
general price index was 120. The value of the building needs to be changed as per the
price changes. The current price index is 360. Find the conversion factor.
a) 0.33
b) 3
c) 240
19. XYZ Limited sold goods throughout the year evenly. The total turnover was Rs 120
Lakhs. The general price index at the beginning of the year was 125 and at the end of the
year was 150.What value of sales needs to be recorded as per CPP Method.
20. A building which was purchased in the year 2001 was recorded as 50 Lakhs when the
general price index was 120. The value of the building needs to be changed as per the
price changes in the year 2018 when the general price index was 330. Find the value of
building as per current purchasing power method
21. Aviral had purchased a building for Rs 25 Lakhs, in the year 1985 when the price index
was 125, He sold the same in the year 2002 when the price index was 500, for Rs
82.5Lakhs. What profit or losses should be recorded using current purchasing power
method?
22. For the following particulars of XYZ LTD what will be value of closing inventory
under Current Purchasing Power Method (CPP) if LIFO method is followed:
Opening Stock – Rs 30000/-
Purchase - Rs 100000/-
Closing Stock - Rs. 40000/-
Price Index in the beginning of the year – 80
Price Index at the end of the year - 100
Average Price Index - 90
a) Rs. 48611/-
b) Rs. 33333/-
c) Rs.37500/-
Answer: a) Rs 48611/-
23. For the transactions that take place throughout the year ------------ index needs to be
adopted under CPP method.
Answer: c) Mid period index - If the transactions are too many and
taking place throughout the year it is not possible to adopt the price
index as per the date of transaction for all individual transactions, hence
an average period index needs to be adopted.
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24. Arun has purchased shares worth Rs 8500/- when the general price index was 130, he
sold the entire shares Rs. 31250/- after a few years when the price index was 325.
Adopting cost of indexation being long term what will be the profit or loss he needs to
show as per current purchasing power method?
25. If the mid period index is not readily available, the value of mid period index can be
calculated as----------------
26. XYZ Limited sold goods throughout the year evenly. The total turnover was Rs 150
Lakhs. The general price index at the beginning of the year was 110 and at the end of the
year was 130.What value of sales needs to be recorded as per CPP Method.
Answer: b) Mid period index - If the transactions are too many and
taking place throughout the year it is not possible to adopt the price
index as per the date of transaction for all individual transactions, hence
an average period index needs to be adopted.
27. For the following particulars of XYZ LTD what will be value of closing inventory
under Current Purchasing Power Method (CPP) if LIFO method is followed:
Opening Stock – Rs 40000/-
Purchase - Rs 100000/-
Closing Stock - Rs. 30000/-
Price Index in the beginning of the year – 80
Price Index at the end of the year - 100
Average Price Index - 90
a) Rs. 48611/-
b) Rs. 33333/-
c) Rs.37500/-
Answer: c) Rs 37500/-
28. For the following particulars of XYZ LTD what will be value of closing inventory
under Current Purchasing Power Method (CPP) if FIFO method is followed:
Opening Stock – Rs 40000/-
Purchase - Rs 100000/-
Closing Stock - Rs. 30000/-
Price Index in the beginning of the year – 80
Price Index at the end of the year - 100
Average Price Index - 90
a) Rs. 48611/-
b) Rs. 33333/-
c) Rs.37500/-
Answer: b) Rs 33333/-
29. For the following particulars of XYZ LTD what will be value of closing inventory
under Current Purchasing Power Method (CPP) if FIFO method is followed:
Opening Stock – Rs 30000/-
Purchase - Rs 100000/-
Closing Stock - Rs. 40000/-
Price Index in the beginning of the year – 80
Price Index at the end of the year - 100
Average Price Index - 90
a) Rs. 44444/-
b) Rs. 33333/-
c) Rs.37500/-
Answer: a) Rs 44444/-
30. For the following particulars of XYZ LTD what will be value of closing inventory
under Current Purchasing Power Method (CPP) if FIFO method is followed:
Opening Stock – Rs 90000/-
Purchase - Rs 20000/-
Closing Stock - Rs. 40000/-
Price Index in the beginning of the year – 80
Price Index at the end of the year - 100
Average Price Index - 90
a) Rs. 44444/-
b) Rs. 33333/-
c) Rs. 47222/-
Answer: c) Rs 47222/-
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