CIPS L4M7 Exam - Topic 7 Question 12 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 12
Topic #: 7

[All L4M7 Questions]

A manufacturer has discovered that some of the stock in its storeroom is obsolete and now wishes to take the appropriate action. Should the manufacturer write the stock off?

ANo, the best approach would be to leave the stock where it is

BYes, as it has no value it must be written off

CYes, this will increase the sales for the period

DNo, it should be included with the closing stock

Show Suggested Answer

Suggested Answer: A, B

The most common subjective forecasting techniques include the following:

- Market surveys

- Employee surveys

- Expert knowledge (Delphi method is a method using expert knowledge)

- Test marketing

Cycle counting is a periodic analysis of inventory in a storage location which is conducted through the counting of samples instead of physically counting the entire inventory available, so as to quickly have an accurate estimate of the inventory available without causing a stop to the day to day working as is the case with physically counting every unit.

The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of fac-tor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.

Weighted moving averages assign a heavier weighting to more current data points since they are more relevant than data points in the distant past. The sum of the weighting should add up to 1 (or 100 percent).

LO 2, AC 2.3

by Emerson at Feb 08, 2023, 10:25 PM

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Adela

4 months ago

Writing it off could actually help with taxes, right?

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Nan

4 months ago

Nah, just leave it there, it might come in handy.

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Belen

4 months ago

Wait, can they really just write it off like that?

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Leonardo

4 months ago

Totally agree, better to clear it out!

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Gilma

4 months ago

Writing it off is the right move, it has no value.

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Ria

5 months ago

I feel like leaving the stock as it is could mislead stakeholders, but I'm unsure if there are exceptions for certain types of inventory.

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Hermila

5 months ago

I practiced a similar question where we had to decide on inventory valuation, and I think writing it off is usually the right choice.

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Luann

5 months ago

I think writing off obsolete stock is important because it reflects the true value of the inventory, but I can't recall if it impacts taxes.

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Luis

5 months ago

I remember discussing how obsolete stock can affect financial statements, but I'm not sure if writing it off is always necessary.

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Gerry

5 months ago

Hmm, I'm a bit unsure about this one. I know we need to match the SIP Domain between the IP Office and the ACCS system, but I'm not sure if we need to change the IP Office SIP Domain or the ACCS system SIP Domain.

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Vallie

5 months ago

I remember practicing a question similar to this, and I feel like we did enable it under the routing process after that.

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Vallie

5 months ago

I remember something about AOQL being related to the average lot quality. Maybe that's the right answer?

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Robt

5 months ago

I'm confident I can eliminate a couple of these options, but I'm still unsure.

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Luke

5 months ago

Hmm, I'm a little unsure about this one. I'll need to double-check the details on setting up the email source and queue. Gotta make sure I don't miss anything.

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Remona

5 months ago

This seems like a tricky one. I'll need to think through the different options carefully.

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Craig

10 months ago

Hey, I heard the manufacturer's storeroom is like a museum - full of ancient, useless artifacts. Time to call in the archaeologists!

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Rutha

8 months ago

C) Yes, this will increase the sales for the period

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Darci

8 months ago

B) Yes, as it has no value it must be written off

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Ria

8 months ago

A) No, the best approach would be to leave the stock where it is

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Willetta

10 months ago

D is a bold strategy, Cotton. Let's see if it pays off for them. I'd go with B and call it a day.

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Jean

8 months ago

B is the safest option, better to write it off and move on.

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Kenneth

9 months ago

B) Yes, as it has no value it must be written off

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Pearly

9 months ago

A) No, the best approach would be to leave the stock where it is

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Andra

10 months ago

C is tempting, but writing off the stock is the right thing to do. Trying to boost sales through creative accounting is a big no-no.

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Odette

8 months ago

C is tempting, but writing off the stock is the right thing to do. Trying to boost sales through creative accounting is a big no-no.

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Stephaine

9 months ago

B) Yes, as it has no value it must be written off

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Ronnie

10 months ago

A) No, the best approach would be to leave the stock where it is

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Christa

10 months ago

I agree with B. Obsolete stock should be written off. Anything else would be like putting lipstick on a pig.

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Maynard

8 months ago

D) No, it should be included with the closing stock

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Jerilyn

8 months ago

C) Yes, this will increase the sales for the period

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Herminia

8 months ago

B) Yes, as it has no value it must be written off

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Hermila

8 months ago

A) No, the best approach would be to leave the stock where it is

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Erick

8 months ago

D) No, it should be included with the closing stock

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Emelda

8 months ago

C) Yes, this will increase the sales for the period

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Lanie

9 months ago

B) Yes, as it has no value it must be written off

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Daron

9 months ago

A) No, the best approach would be to leave the stock where it is

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France

11 months ago

The correct answer is B. The stock has no value, so it must be written off. Trying to keep it on the books would be misleading.

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Tamala

9 months ago

D) No, it should be included with the closing stock

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Ramonita

10 months ago

C) Yes, this will increase the sales for the period

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Tracey

10 months ago

B) Yes, as it has no value it must be written off

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Hermila

10 months ago

A) No, the best approach would be to leave the stock where it is

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Dino

11 months ago

But wouldn't including it with the closing stock affect the financial statements negatively?

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Desmond

11 months ago

I agree with Blossom, it's better to write it off than keep it in the storeroom.

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Blossom

11 months ago

I think the manufacturer should write off the obsolete stock.

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