Grade 12 · CAPS

Grade 12 Stock Valuation

Accounting practice questions and a worked example

Grade 12 stock valuation covers the FIFO, weighted-average and specific identification methods. The questions here ask you to calculate the value of closing stock, the weighted-average cost of one unit, the number and value of missing items and the stockholding period, and to comment on how well the stock is being managed. They come from the NSC papers for November 2023, 2024 and 2025, each with the answer from the marking guideline.

Worked example

4.2 INVENTORY VALUATION Clearview Electronics is owned by Sipho Cossa. The business sells two models of printers, Hawi and Yama. The specific identification method is used to value their stock. Their financial year ended on 28 February 2023. Good internal controls ensured that there were no stock shortages. 4.2.3 Explain whether Sipho should be concerned about the stockholding periods of the Hawi and Yama printers. Quote figures. Give possible reasons for the difference in the holding periods of the two models.

Answer

Hawi: • On the shelves for 152,1 days (more than 3 months). • Slow sales / not popular / older model / possible obsolescence. Yama: • On the shelves for only 55,2 days (less than 2 months). • Although more expensive, it has steadier sales / there is good demand. Possible reason for the difference: Yama is a later model / offers the latest, up-to-date technology / is compatible with the latest computer programs / is of better quality (more features).

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Stock Valuation

Question 1 of 3

QUESTION 1: COMPANY FINANCIAL STATEMENTS BUHLE LIMITED The information relates to the financial year ended on 28 February 2023. The business sells bicycles. 1.1 Refer to Information B (ii). Calculate the value of closing stock of bicycles using the FIFO method.

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More practice questions

Explore additional Grade 12 Stock Valuation questions.

  • 2
    4.1 Choose the correct cost concepts from those given in brackets. Write only the word(s) next to the question numbers (4.1.1 to 4.1.3) in the ANSWER BOOK. 4.1.2 The (first-in first-out/weighted-average) method is more relevant for low-cost stock items purchased on a more regular basis.
  • 3
    4.1 Choose the correct cost concepts from those given in brackets. Write only the word(s) next to the question numbers (4.1.1 to 4.1.3) in the ANSWER BOOK. 4.1.3 The (first-in first-out/weighted-average) stock valuation method will value closing stock at the most current stock prices.
  • 4
    4.2 INVENTORY VALUATION Clearview Electronics is owned by Sipho Cossa. The business sells two models of printers, Hawi and Yama. The specific identification method is used to value their stock. Their financial year ended on 28 February 2023. Good internal controls ensured that there were no stock shortages. 4.2.1 Calculate the value of the closing stock on 28 February 2023. Use the specific identification method.
  • 5
    4.2 INVENTORY VALUATION Clearview Electronics is owned by Sipho Cossa. The business sells two models of printers, Hawi and Yama. The specific identification method is used to value their stock. Their financial year ended on 28 February 2023. Good internal controls ensured that there were no stock shortages. 4.2.2 Calculate how long (in days) it will take to sell the closing stock of the Hawi printers.

Common mistakes

  • Leaving returns out of the calculation. Goods returned to the supplier reduce both the units and the rand value of purchases.
  • Dividing by purchases only for the weighted average. The cost per unit is the total cost of opening stock plus net purchases, divided by the total units available.
  • Using FIFO backwards. With FIFO the oldest stock is sold first, so the closing stock is valued at the most recent purchase prices.

More Grade 12 Accounting topics

Aligned to CAPS Grade 12 Accounting — Stock Valuation. Curriculum source: CAPS for the FET Phase, Department of Basic Education.

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