Author name: Administrator

523. Cost of abnormal wastage is:

Charged to the product cost
Charged to the profit & loss account
charged partly to the product and partly profit & loss account
not charged at all
✅ The correct answer is B.
Cost of abnormal wastage is charged to the profit & loss account. It is in excess of the standard percentage of wastage set up to account for the normal wastage. The cost of abnormal waste should be excluded from the total cost and charged to Costing Profit and Loss Account. If any value is realized from the waste, the Process Account concerned may be credited.

532. Which among the following is true regarding life insurance contracts?

They are verbal contracts not legally enforceable
They are verbal which are legally enforceable
They are contracts between two parties (insurer and insured) as per requirements of Indian Contract Act, 1872
They are similar to wager contracts
✅ The correct answer is C.
They are contracts between two parties (insurer and insured) as per requirements of Indian Contract Act, 1872 is true about life insurance contracts.

535. “Calculate the value of closing stock from the following according to FIFO method: 1st January, 20XX: Opening balance: 50 units @ Rs 4 Receipts: 5th January, 20XX: 100 units @ Rs 5 12th January, 20XX: 200 units @ Rs 4.50 Issues: 2nd January, 20XX: 30 units 18th January, 20XX: 150 units”

Rs. 765
Rs. 805
Rs. 786
Rs. 700
✅ The correct answer is A.
Calculation of Closing Stock:
1st January, 20XX: Opening balance: 50 units @ Rs 4 = 50 × 4 = Rs. 200
Issue: 2nd January, 20XX: 30 units = 30 × 4 = Rs. 120
Remaining Stock = (50 – 30) × 4 = Rs. 80
Reciept: 5th January, 20XX: 100 units @ Rs 5 = 100 × 5 = Rs. 500
Reciept: 12th January, 20XX: 200 units @ Rs 4.50 = 200 × 4.5 = Rs. 900
Remaining Stock = Rs. 80 + Rs. 500 + Rs. 900 = Rs. 1480
Issue: 18th January, 20XX: 150 units = (20 × 4) + (100 × 5) + (30 × 4.5) = Rs. 80 + Rs. 500 + Rs. 135 = Rs. 715
Remaining Stock = (200 – 30) × 4.5 = Rs. 765.
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