Inventory Valuation is one of 9 topics in the Grade 12 Accounting CAPS syllabus, covered across 3 lessons on Study Vault. Below are real practice questions from this topic with full worked answers.
Sample practice questions
Easy
1. Under the perpetual inventory system, the Trading Inventory account is updated:
Continuously, immediately after every purchase and every sale
Only once a year, after a physical stocktake
Only when goods are purchased, never when sold
Only at the start of the financial year
Answer: Continuously, immediately after every purchase and every sale — The perpetual system records every purchase directly into inventory and, for every sale, also records the cost of the goods leaving inventory, keeping the account balance continuously up to date.
Easy
2. Under the periodic inventory system, purchases during the year are recorded in:
A separate Purchases account, not directly into Trading Inventory
The Trading Inventory account directly, exactly as under the perpetual system
The Sales account
The Cost of Sales account directly
Answer: A separate Purchases account, not directly into Trading Inventory — Under the periodic system, purchases go into a separate Purchases account during the year, and Trading Inventory is only updated once, at year end, based on a physical stocktake.
Medium
3. Under the periodic system, what formula is used to calculate cost of sales at year end?
Answer: Opening Inventory + Purchases - Closing Inventory — Cost of Sales = Opening Inventory + Purchases - Closing Inventory (with closing inventory determined by a physical stocktake).
