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    Question

    A business follows the FIFO method of inventory

    management and undertook the following inventory transactions during the year :    Opening Stock: 100 0 units @ ₹10 0     Purchases: 200 0 units @ ₹12 0     Sales: 250 0 units    W hat is the closing inventory value of the business ?   
    A ₹50,000 Correct Answer Incorrect Answer
    B ₹55,000 Correct Answer Incorrect Answer
    C ₹60,000 Correct Answer Incorrect Answer
    D ₹100,000 Correct Answer Incorrect Answer
    E ₹110,000 Correct Answer Incorrect Answer

    Solution

    Explanation :   
    FIFO – First In First Out i.e. o ldest stock is sold first   
    As such, for selling the 250 0 units , 100 0 units from opening stock at ₹10 0 each are used followed by additional 150 0 units from the purchases of 2000 units made during the year at ₹12 0 each.     Thus, the remaining inventory from the purchases stands at 2000 units (purchased) – 1500 units sold = 500 units of ₹12 0 each.    
    → Closing inventory = 50 0 units @ ₹12 0 = ₹60 , 0 0 0    

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