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CMA Intermediate · Cost Accounting · Material Costs

A firm records stock of a material at 1,200 kg in the bin card, while the stores ledger shows 1,150 kg. A physical check finds 1,150 kg. Which statement is correct?

The bin card should be corrected to 1,150 kg after finding the cause of the difference, because the physical count agrees with the stores ledger. Physical stock cannot be altered to match records, and the discrepancy must be investigated and adjusted in the bin card.

  1. AThe stores ledger is wrong and must be corrected to 1,200 kg
  2. BThe bin card should be corrected to the physical stock of 1,150 kg after investigating the differenceCorrect
  3. CNo action is needed because bin card is only a memorandum record
  4. DThe physical stock should be increased by 50 kg

Explanation

Physical verification is the reference point. The bin card balance is 50 kg higher than the actual stock, so after investigating the reason, the bin card is adjusted to 1,150 kg. The stores ledger agrees with physical stock already.

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