In Grade 12 Accounting, inventory valuation and internal control are crucial topics for students to understand. These subjects focus on ethical behavior, transparency, and accountability within the discipline .
It emphasizes the practical application of principles through accurate financial recording, communication of financial statements, and managerial reports. For instance, a practical example involves Michelle Stores selling blankets and towels, requiring students to calculate the closing stock value using the FIFO method for towels and the weighted average method for blankets, as well as to determine the cost of sales and stock turnover rate for towels.
This study guide also offers explanations and examples of different stock systems introduced in previous grades, along with three stock valuation methods
Inventory Valuation and Internal Control Questions and Answers
You are provided with information relating to Michelle Stores. The business sells blankets and towels. The financial year ends on 28 February each year. The business uses both First in First Out (FIFO) and weighted average methods to value the stock.
- Use the information given to calculate the closing stock value of:
- Towels (using the FIFO method)
- Blankets (using the weighted-average method)
Calculate the following for towels (you may prepare a trading account to calculate these figures):
- Cost of sales
- Stock turnover rate