Question 1

AASB 102 Inventories applies to the accounting for:

Accepted Answer

A)  work in progress under construction contracts; 
B)  financial instruments; 
C)  biological assets; 
D)  materials consumed in the manufacture of knitting machines for sale. 
A)  work in progress under construction contracts; 
B)  financial instruments; 
C)  biological assets; 
D)  materials consumed in the manufacture of knitting machines for sale.

Question 2

The weighted average inventory costing method is particularly suitable to inventory where:

Accepted Answer

A)  dissimilar products are stored in separate locations; 
B)  the entity carries stocks of raw materials, work-in-progress and finished goods; 
C)  goods have distinct use-by dates and the goods produced first must be sold earliest; 
D)  homogeneous products are mixed together. 
A)  dissimilar products are stored in separate locations; 
B)  the entity carries stocks of raw materials, work-in-progress and finished goods; 
C)  goods have distinct use-by dates and the goods produced first must be sold earliest; 
D)  homogeneous products are mixed together.

Question 3

Uno Ltd uses a periodic inventory system and rounds the average unit cost to the nearest dollar. The following data relates to Uno Ltd for the year ended 30 June 2014:
$\begin{array}{ll}
\text { Opening inventory } & 10 \text { units @ average cost of \$25 each } \
\text { January purchases } & 10 \text { units @ \$24 each } \
\text { February sales } & 8 \text { units } \
\text { March product returns } & 4 \text { units } \
\text { June sales } & 6 \text { units } \
\text { July purchases } & 39 \text { units @\$26 each } \
\text { August sales } & 18 \text { units } \
\text { October purchases } & 10 \text { units @\$24 each } \
\text { November sales } & 25 \text { units }
\end{array}$

Accepted Answer

A)  $1528 
B)  $1734 
C)  $1425 
D)  $1984 
A)  $1528 
B)  $1734 
C)  $1425 
D)  $1984

Question 4

Commodity broker traders are able to measure their inventories at:

Accepted Answer

A)  replacement cost 
B)  nominal cost 
C)  fair value less costs of disposal 
D)  current cost 
A)  replacement cost 
B)  nominal cost 
C)  fair value less costs of disposal 
D)  current cost

Question 5

'Net realisable value' of inventory is defined as the net amount that an enterprise expects to realise from the sale of the inventory:

Accepted Answer

A)  in the ordinary course of operations less estimated costs of completion and costs necessary to make the sale; 
B)  plus the estimated costs of completion plus the estimated costs necessary to make the sale; 
C)  in a forced sale; 
D)  plus the estimated costs of completion. 
A)  in the ordinary course of operations less estimated costs of completion and costs necessary to make the sale; 
B)  plus the estimated costs of completion plus the estimated costs necessary to make the sale; 
C)  in a forced sale; 
D)  plus the estimated costs of completion.

Question 6

When an inventory costing formula is changed, the change is required to be applied:

Accepted Answer

A)  prospectively and the adjustment taken through the current profit or loss; 
B)  retrospectively and the adjustment taken through the opening balance of retained earnings; 
C)  prospectively and the current period adjustment recognised directly in equity; 
D)  retrospectively and the adjustment recognised as an extraordinary gain or loss. 
A)  prospectively and the adjustment taken through the current profit or loss; 
B)  retrospectively and the adjustment taken through the opening balance of retained earnings; 
C)  prospectively and the current period adjustment recognised directly in equity; 
D)  retrospectively and the adjustment recognised as an extraordinary gain or loss.

Question 7

AASB 102 Inventories requires that when inventories are written down to net realisable value, they are written-down:

Accepted Answer

A)  on a class-by-class basis; 
B)  on the basis of industry segment; 
C)  on an item-by-item basis; 
D)  according to geographical segment within the entity. 
A)  on a class-by-class basis; 
B)  on the basis of industry segment; 
C)  on an item-by-item basis; 
D)  according to geographical segment within the entity.

Question 8

Which of the following is an appropriate journal entry to recognise inventory items that have been lost?

Accepted Answer

A)  
DR Inventory(asset)
CR Provision for inventory losses (liability); 
B)  
DR Inventory losses (expense)
CR Inventory (asset); 
C)  
DR Cost of Goods Sold (expense) CR Inventory (asset); 
D)  
DR Provision for Inventory losses (liability) CR Inventory (asset). 
A)  
DR Inventory(asset)
CR Provision for inventory losses (liability); 
B)  
DR Inventory losses (expense)
CR Inventory (asset); 
C)  
DR Cost of Goods Sold (expense) CR Inventory (asset); 
D)  
DR Provision for Inventory losses (liability) CR Inventory (asset).

Question 9

Where inventories in an industry are measured by reference to historical cost which of the following measurement rules applies subsequent to initial measurement?

Accepted Answer

A)  historical cost; 
B)  discounted cash flow; 
C)  lower of cost and net realisable value; 
D)  replacement cost. 
A)  historical cost; 
B)  discounted cash flow; 
C)  lower of cost and net realisable value; 
D)  replacement cost.

AASB 102 Inventories applies to the accounting for:

The weighted average inventory costing method is particularly suitable to inventory where:

Commodity broker traders are able to measure their inventories at:

'Net realisable value' of inventory is defined as the net amount that an enterprise expects to realise from the sale of the inventory:

When an inventory costing formula is changed, the change is required to be applied:

AASB 102 Inventories requires that when inventories are written down to net realisable value, they are written-down:

Which of the following is an appropriate journal entry to recognise inventory items that have been lost?

Where inventories in an industry are measured by reference to historical cost which of the following measurement rules applies subsequent to initial measurement?

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Translation of the Financial Statements of Foreign Entities

Employee Benefits

Property, Plant and Equipment

Leases

Understanding Australian Accounting Standards

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Business Combinations

Consolidation: Principles and Accounting Requirements

Consolidation: Intragroup Transactions

Consolidation: Non Controlling Interest

Joint Arrangements

Associates and Joint Ventures

Filters

Exam 12: Inventories

AASB 102 Inventories applies to the accounting for:

The weighted average inventory costing method is particularly suitable to inventory where:

Commodity broker traders are able to measure their inventories at:

'Net realisable value' of inventory is defined as the net amount that an enterprise expects to realise from the sale of the inventory:

When an inventory costing formula is changed, the change is required to be applied:

AASB 102 Inventories requires that when inventories are written down to net realisable value, they are written-down:

Which of the following is an appropriate journal entry to recognise inventory items that have been lost?

Where inventories in an industry are measured by reference to historical cost which of the following measurement rules applies subsequent to initial measurement?

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Translation of the Financial Statements of Foreign Entities

Employee Benefits

Property, Plant and Equipment

Leases

Understanding Australian Accounting Standards

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Business Combinations

Consolidation: Principles and Accounting Requirements

Consolidation: Intragroup Transactions

Consolidation: Non Controlling Interest

Joint Arrangements

Associates and Joint Ventures

Filters