Paper 3 · Inventory valuation
Unused stationery costing $3 500 had mistakenly been included in the physical count of trading inventory at 10 April 2016. How should this amount be treated when calculating the correct trading inventory figure?
AAdded to the trading inventory figure, because it was purchased for use in the business.
BLeft unchanged in the trading inventory figure, because it was physically counted on the premises.
CDeducted from trade payables instead of from inventory, because stationery purchases are recorded as an expense.
DDeducted from the trading inventory figure, because stationery is not goods held for resale.
Explanation: Trading inventory should only include goods held for resale. Stationery is a consumable used in the business, not trading stock, so its cost is removed from the inventory figure.
Derived from ZIMSEC Accounting Paper 3, June 2019, Q3
