Question 2
Observation
- Candidates’ performance was impressive. Most of the candidates were able to answer this part correctly.
- Part (b) of the question was poorly attempted by the candidates. The following are some of the required answers.
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Reasons for stores accounting
- To supply information for stock-taking.
- To facilitate material planning and provisioning.
- It provides a basis for inventory control.
- It helps to indicate the value of stock in the store.
- It is a means of calculating the costs of goods manufactured.
- This part of the question was poorly attempted by the candidates. The following are some of the required answers.
Advantages of holding little stock
- It lowers holding cost.
- It requires less storage space.
- It frees up cash to meet other expenses.
Disadvantages of holding little stock
- There is a risk of running out of stock.
- It can make a company miss out on sales.
- There is overdependence on the efficiency of suppliers.