IGCSE Accounting: Valuation of inventory (Cambridge 0452) – Practice Questions

Syllabus edition note. This resource follows the Cambridge IGCSE Accounting 0452 syllabus (and Cambridge O Level Accounting 7707, which has the same subject content for the same series) for exams in 2027, 2028 and 2029 (version 1), first examined in the March 2027 series in India and the June 2027 series elsewhere. If you sit 0452 in November 2026, you sit the 2026 syllabus (version 2), which differs: Paper 1 has 35 multiple-choice marks in 1 hour 15 minutes, not 40 marks in 1 hour 30 minutes; Topic 7 is “Accounting principles and policies”, without 7.2 Ethical considerations or 7.3 Technology and sustainability; 4.4 is “Irrecoverable debts and provision for doubtful debts”; income statements are named instead of statements of profit or loss; three-column running balance accounts are not required; Clubs and societies is 5.4 and Manufacturing accounts 5.5; and 6.3 is “Inter-firm comparison”. For this topic, the 2026 syllabus says “recovery of debts written off” where the 2027-2029 syllabus says “irrecoverable debts recovered”, asks for simple inventory valuation statements, and does not separately list choosing a depreciation method for each type of non-current asset, journal entries for purchasing a non-current asset, or calculating the profit or loss on disposal. If you sit in November 2026, work from the 2026 syllabus on the Cambridge International website.

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 4.5 Valuation of inventory of the Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1). Amounts are in dollars ($). Teaching is in the study guide and the revision notes.

Questions

1. State what is meant by net realisable value, and give one cost that may be deducted in finding it. [2]

2. Brantley Toys holds 24 kites that cost 38.50 each. They are expected to sell for 52.00 each, and selling costs will be 8.40 per kite. Calculate the value of the kites for inventory purposes. [3]

3. Thackeray Stationers holds three items.

Item	Units	Cost per unit	Selling price per unit	Costs still to pay per unit
A	35	16.00	22.50	2.00 commission
B	20	48.00	55.00 after repair	12.50 repair
C	14	29.00	36.00	3.00 packaging, 4.50 delivery

(a) Calculate the value of the inventory. [4] (b) The owner uses the lower of total cost and total net realisable value. State this figure and explain why it is not acceptable. [2]

4. Garrity Lighting holds 90 lamps that cost 12.00 each. After a repair costing 2.50 per lamp they can be sold for 13.90, and delivery will cost 0.80 per lamp.

(a) Calculate the value of the lamps for inventory purposes. [3] (b) State the effect on profit for the year of valuing them at this figure instead of at cost. [1]

5. (a) Hawksworth Hardware has a year end of 31 December 2028 and counted its inventory on 3 January 2029, valuing it at cost at 31,570. Between 1 and 3 January, purchases of 4,860 were received, goods costing 640 were returned to a supplier, and sales of 7,350 were made at a mark-up of 50%. Calculate inventory at 31 December 2028. [4] (b) Cresswell Cookware counted its inventory on 27 December, valuing it at cost at 18,420. Between 28 and 31 December, purchases of 2,310 were received and sales of 3,900 were made at a margin of 40%. Calculate inventory at 31 December. [3]

6. At 30 June 2028 a pallet of goods costing 3,900 in a separate shed was not counted by Lindgren Fabrics, so closing inventory was understated by 3,900.

(a) For the year ended 30 June 2028, state whether each was overstated or understated, and by how much: (i) gross profit; (ii) profit for the year; (iii) equity; (iv) inventory in the statement of financial position. [4] (b) State the effect on gross profit for the year ended 30 June 2029. [1] (c) Explain the effect on equity at 30 June 2029. [1]

7. Dacosta Ceramics has a draft statement of profit or loss for 2028 with revenue 212,400, opening inventory 21,300, purchases 148,900, closing inventory 26,700 and expenses 41,250. The closing inventory includes goods that cost 3,000 and now have a net realisable value of 1,250.

(a) Calculate corrected closing inventory. [2] (b) Calculate corrected gross profit. [2] (c) Calculate corrected profit for the year. [1] (d) State the effect of the correction on equity. [1]

8. Ludlam Frames reported profit for the year of 31,800 in Year 1 and 36,500 in Year 2. Goods costing 5,200 were left out of the closing inventory at the end of Year 1. Closing inventory at the end of Year 2 was correct.

(a) Calculate corrected profit for each year. [2] (b) Calculate the total profit for the two years before and after correction, and comment on the result. [2]

9. The draft figures for Winterbourne Toys for 2028 are revenue 96,500, opening inventory 9,800, purchases 61,200, closing inventory 12,430 and expenses 17,640. Closing inventory was valued at cost. It was later found that:

1. 40 toy drones cost 18 each; they can be sold for 21 each, with selling costs of 7 each.
2. 15 toy trains cost 22 each; after repairs costing 4 each they can be sold for 24 each.
3. Goods costing 275 were counted twice.

(a) Calculate the reduction required for each of items 1 and 2. [4] (b) Calculate corrected closing inventory. [2] (c) Calculate the corrected cost of sales, then the corrected gross profit, then the corrected profit for the year. [3] (d) State the effect of the corrections on equity at 31 December 2028. [1] (e) State the effect on gross profit for 2029 if the draft closing inventory were left uncorrected. [1]

10. An owner says: “Valuing my unsold goods at the price I expect to sell them for would show my profit sooner.” Explain why this is not acceptable, referring to two concepts. [4]

Answers

1. The expected selling price less the costs still to be paid to sell the goods [1]; for example repair, repackaging, commission or delivery to the customer [1]. [2] Examiner insight: A full definition has two parts: the selling price and the deductions.

2. NRV = 52.00 − 8.40 = 43.60 [1]. This is higher than cost of 38.50, so cost is used [1]. Value = 24 × 38.50 = 924 [1]. [3] Examiner insight: Showing the NRV before the comparison makes the choice of cost visible.

3. (a) A: NRV = 22.50 − 2.00 = 20.50, cost is lower, 35 × 16.00 = 560 [1]. B: NRV = 55.00 − 12.50 = 42.50, lower than cost of 48.00, 20 × 42.50 = 850 [1]. C: NRV = 36.00 − 3.00 − 4.50 = 28.50, lower than cost of 29.00, 14 × 28.50 = 399 [1]. Total = 560 + 850 + 399 = 1,809 [1]. (b) Total cost is 1,926 and total NRV is 1,966.50, so the lower is 1,926 [1]. It is not acceptable because the extra NRV on item A hides the losses on B and C, so inventory would be 117 too high [1]. [6] Examiner insight: Each item needs its own comparison, so show cost, NRV and the lower figure per unit.

4. (a) NRV = 13.90 − 2.50 − 0.80 = 10.60 [1]. This is lower than cost of 12.00, so NRV is used [1]. Value = 90 × 10.60 = 954 [1]. (b) Profit for the year is reduced by 90 × (12.00 − 10.60) = 126 [1]. [4] Examiner insight: Both the repair and the delivery are deducted when the price quoted is the price after repair.

5. (a) Cost of goods sold = 7,350 ÷ 1.5 = 4,900 [1]. Remove purchases received after year end: 31,570 − 4,860 [1]. Add back goods returned to the supplier before the count: + 640 [1]. Add cost of goods sold: + 4,900 = 32,250 [1]. (b) Cost of goods sold = 3,900 × 60% = 2,340 [1]. Add purchases after the count: 18,420 + 2,310 [1]. Subtract cost of goods sold: − 2,340 = 18,390 [1]. [7] Examiner insight: The count date decides whether purchases are added or subtracted, and sales must be converted to cost first.

6. (a) (i) Gross profit understated by 3,900 [1]; (ii) profit for the year understated by 3,900 [1]; (iii) equity understated by 3,900 [1]; (iv) inventory understated by 3,900 [1]. (b) Opening inventory for 2029 is too low, so cost of sales is understated and gross profit is overstated by 3,900 [1]. (c) The two profit errors cancel, so equity at 30 June 2029 is correct (assuming closing inventory then is right) [1]. [6] Examiner insight: Each effect needs a direction and an amount; “affected” alone says too little.

7. (a) Reduction = 3,000 − 1,250 = 1,750 [1]. Corrected closing inventory = 26,700 − 1,750 = 24,950 [1]. (b) Corrected cost of sales = 21,300 + 148,900 − 24,950 = 145,250 [1]. Corrected gross profit = 212,400 − 145,250 = 67,150 [1]. (c) Profit = 67,150 − 41,250 = 25,900 [1]. (d) Equity is reduced by 1,750 [1]. [6] Examiner insight: Checking that corrected gross profit is 1,750 below the draft figure of 68,900 confirms the working.

8. (a) Year 1: 31,800 + 5,200 = 37,000 [1]. Year 2: opening inventory was 5,200 too low, so profit was overstated: 36,500 − 5,200 = 31,300 [1]. (b) Before: 31,800 + 36,500 = 68,300; after: 37,000 + 31,300 = 68,300 [1]. The total is unchanged; the error only moved profit from Year 1 to Year 2 [1]. [4] Examiner insight: Adjusting Year 1 but leaving Year 2 unchanged contradicts the same-total result.

9. (a) Drones: NRV = 21 − 7 = 14 [1]; reduction = 40 × (18 − 14) = 160 [1]. Trains: NRV = 24 − 4 = 20 [1]; reduction = 15 × (22 − 20) = 30 [1]. (b) Total reductions = 160 + 30 + 275 = 465 [1]. Corrected closing inventory = 12,430 − 465 = 11,965 [1]. (c) Cost of sales = 9,800 + 61,200 − 11,965 = 59,035 [1]; gross profit = 96,500 − 59,035 = 37,465 [1]; profit for the year = 37,465 − 17,640 = 19,825 [1]. (d) Equity is reduced by 465 [1]. (e) Opening inventory for 2029 would be overstated by 465, so 2029 gross profit would be understated by 465 [1]. [11] Examiner insight: Three problems need three adjustments; show each one before totalling.

10. Realisation: profit is recognised only when goods are sold, not when they are expected to be sold [1]; valuing at selling price would take profit before a sale has happened [1]. Prudence: expected losses are recognised but expected profits are not [1]; inventory is therefore valued at the lower of cost and NRV, never above cost [1]. [4] Examiner insight: Naming a concept is weaker than stating what it requires and applying it to the owner’s claim.

Where marks are usually lost

• Comparing grand totals of cost and NRV instead of item by item.
• Deducting selling costs from cost rather than from the selling price.
• Using NRV when it is higher than cost.
• Adding purchases to a count taken after the year end.
• Using selling price in a count adjustment without converting to cost.
• Giving “overstated” or “understated” without the amount.
• Leaving out the opposite effect in the following year.

Next steps

• Re-read the study guide and revision notes.
• Try the mixed Accounting Procedures practice set.
• Tick off the checklist and visit the course hub.
• Take the free diagnostics.
• Book a free trial class: /trial/.

Frequently asked questions

Where do students usually lose marks on inventory valuation questions? Common losses are comparing grand totals of cost and net realisable value instead of working item by item, deducting selling costs from cost rather than from the selling price, and using net realisable value when it is higher than cost.

What mistakes are common when adjusting an inventory count taken on another date? Adding purchases to a count taken after the year end, and using sales at selling price without converting them to cost first. Work out the direction of each adjustment before you calculate.

How should I describe the effect of an inventory error in Cambridge IGCSE Accounting 0452? State whether each figure is overstated or understated and give the amount. Then show the opposite effect in the following year, because closing inventory becomes the next year’s opening inventory.

Which section of the 0452 syllabus do these questions cover? Section 4.5 Valuation of inventory of the Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029. It covers valuing inventory, calculating its value and the effect of an incorrect valuation.

Official syllabus

Cambridge IGCSE Accounting 0452 syllabus for 2027, 2028 and 2029 (version 1), section 4.5 Valuation of inventory, published by Cambridge International Education (September 2024).