Neco 2019 Financial Accounting Question 34

Practice objective / multiple choice question 34 from the 2019 Neco Financial Accounting examination.

Neco 2019 Financial Accounting Objective / Multiple Choice Easy Difficulty

Question 34 NECO • 2019 • FINANCIAL_ACCOUNTING • objective

A company decides to cease its operations permanently. Which fundamental accounting concept is violated by this decision and how does it affect the valuation of inventory on the statement of financial position?

A. Violates the historical‑cost concept; inventory is valued at market value rather than net realizable value

B. Violates the matching‑principle; inventory is valued at replacement cost rather than net realizable value

C. Violates the consistency concept; inventory is valued at cost rather than net realizable value

Correct Answer D. Violates the going‑concern concept; inventory is valued at net realizable value rather than cost

Correct Answer

Correct Option:

Violates the going‑concern concept; inventory is valued at net realizable value rather than cost

This is Neco 2019 Financial Accounting Question 34. It is one of the objective questions from the 2019 Neco Financial Accounting examination.

Difficulty level: Easy .

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