Question 1

The lower of cost or net realisable value procedure is used with which of the following inventory methods?
I. FIFO
II. LIFO
III. Weighted average
IV. The perpetual method

Accepted Answer

A)  IV only 
B)  I and III only 
C)  I, II, III and IV 
D)  I, III and IV only 
A)  IV only 
B)  I and III only 
C)  I, II, III and IV 
D)  I, III and IV only

Question 2

The end of the financial year for Ziggie's Trading Company is 30 June 2019. At that date, ending inventory was understated by $3 650. The profit for the year ending 30 June 2019 will be:

Accepted Answer

A)  understated. 
B)  overstated. 
C)  correctly stated. 
D)  dependant on whether or not the inventory increased during 2019. 
A)  understated. 
B)  overstated. 
C)  correctly stated. 
D)  dependant on whether or not the inventory increased during 2019.

Question 3

Products can be uniquely identified by using:

Accepted Answer

A)  ledger account numbers. 
B)  purchase order numbers. 
C)  photos. 
D)  bar codes. 
A)  ledger account numbers. 
B)  purchase order numbers. 
C)  photos. 
D)  bar codes.

Question 4

Which of the following is not included in the cost of inventory as defined by IAS 2/AASB 102?

Accepted Answer

A)  Cost of purchase. 
B)  Import duties. 
C)  GST. 
D)  Costs incurred in bringing the inventory to its present location and condition. 
A)  Cost of purchase. 
B)  Import duties. 
C)  GST. 
D)  Costs incurred in bringing the inventory to its present location and condition.

Question 5

The accounting standards governing determination of the cost of inventories are:

Accepted Answer

A)  IAS 3/AASB 3. 
B)  IAS 8/AASB 8. 
C)  IAS 2/AASB 102. 
D)  IAS 34/AASB 134. 
A)  IAS 3/AASB 3. 
B)  IAS 8/AASB 8. 
C)  IAS 2/AASB 102. 
D)  IAS 34/AASB 134.

Question 6

Which item should not be included in the income statement's cost of inventory?

Accepted Answer

A)  The purchase price of the goods. 
B)  Cost for normal storage of the goods. 
C)  Costs incurred in preparing the goods for sale 
D)  Costs associated with receiving and inspecting the goods 
A)  The purchase price of the goods. 
B)  Cost for normal storage of the goods. 
C)  Costs incurred in preparing the goods for sale 
D)  Costs associated with receiving and inspecting the goods

Question 7

Which statement relating to the moving average method of costing inventories, used with the perpetual inventory system, is correct?

Accepted Answer

A)  A new average cost is calculated after each sale. 
B)  A new average cost is calculated after each purchase. 
C)  A new average cost is calculated at the end of each month. 
D)  A new average cost is calculated after each sale and each purchase. 
A)  A new average cost is calculated after each sale. 
B)  A new average cost is calculated after each purchase. 
C)  A new average cost is calculated at the end of each month. 
D)  A new average cost is calculated after each sale and each purchase.

Question 8

Which of the following are reasons for the selling value of some inventory items falling below their cost price?
I. Obsolescence
II. Damage
III. Past use-by date
IV. A rise in the market price

Accepted Answer

A)  I and II only. 
B)  II and III only. 
C)  I, II and III only. 
D)  I, II, III and IV. 
A)  I and II only. 
B)  II and III only. 
C)  I, II and III only. 
D)  I, II, III and IV.

Question 9

Which inventory valuation method gives the highest profit when inventory costs are rising?

Accepted Answer

A)  FIFO. 
B)  LIFO. 
C)  Weighted average. 
D)  It is not possible to calculate which method gives the highest profit. 
A)  FIFO. 
B)  LIFO. 
C)  Weighted average. 
D)  It is not possible to calculate which method gives the highest profit.

Question 10

Inventory is normally classified in the balance sheet as a:

Accepted Answer

A)  current liability. 
B)  current asset. 
C)  negative asset. 
D)  non-current asset. 
A)  current liability. 
B)  current asset. 
C)  negative asset. 
D)  non-current asset.

Question 11

In relation to inventory, net realisable value is the estimated:

Accepted Answer

A)  discounted value. 
B)  replacement value. 
C)  selling price less stock loss. 
D)  selling price less anticipated further costs to complete the sale. 
A)  discounted value. 
B)  replacement value. 
C)  selling price less stock loss. 
D)  selling price less anticipated further costs to complete the sale.

Question 12

NET Computers sold 20 modems for $60 on 30 April. At that date, the stock card for the modems sold had a total of 50 modems on hand at an average cost of $45.50 each. What is the cost of the modems recognised in the income statement? Assume the weighted average method of costing is used.

Accepted Answer

A)  $910 
B)  $1 200 
C)  $2 275 
D)  $3 000 
A)  $910 
B)  $1 200 
C)  $2 275 
D)  $3 000

Question 13

The ratio that indicates an entity's overall mark-up on goods sold is the:

Accepted Answer

A)  gross profit ratio. 
B)  profit margin ratio. 
C)  inventory turnover ratio. 
D)  return on inventory ratio. 
A)  gross profit ratio. 
B)  profit margin ratio. 
C)  inventory turnover ratio. 
D)  return on inventory ratio.

Question 14

Hunter Coy sells calculators. At the beginning of March, 100 Z1200 scientific calculators were on hand for which the firm had paid $25 each. Purchases and sales for the month were as follows.
 
If Hunter Coy uses a periodic system with a LIFO cost flow assumption March's cost of sales for the Z1200 scientific calculators is:

Accepted Answer

A)  $3360. 
B)  $4500. 
C)  $5020. 
D)  $5340. 
A)  $3360. 
B)  $4500. 
C)  $5020. 
D)  $5340.

Question 15

The specific identification method of costing inventory would be unsuitable for which of the following?

Accepted Answer

A)  Works of art 
B)  Motor vehicles 
C)  Gold jewellery 
D)  Petrol at a service station 
A)  Works of art 
B)  Motor vehicles 
C)  Gold jewellery 
D)  Petrol at a service station

Question 16

Assuming rising inventory prices, which statement is correct?

Accepted Answer

A)  FIFO reports a lower profit than other methods. 
B)  FIFO reports a lower value for cost of sales than other methods. 
C)  FIFO reports a lower value for closing inventory than other methods. 
D)  Using FIFO, it is not possible to calculate whether cost of sales/inventory is lower or higher than it would be if other assumptions about inventory valuation were made. 
A)  FIFO reports a lower profit than other methods. 
B)  FIFO reports a lower value for cost of sales than other methods. 
C)  FIFO reports a lower value for closing inventory than other methods. 
D)  Using FIFO, it is not possible to calculate whether cost of sales/inventory is lower or higher than it would be if other assumptions about inventory valuation were made.

The lower of cost or net realisable value procedure is used with which of the following inventory methods? I. FIFO II. LIFO III. Weighted average IV. The perpetual method

The end of the financial year for Ziggie's Trading Company is 30 June 2019. At that date, ending inventory was understated by $3 650. The profit for the year ending 30 June 2019 will be:

Products can be uniquely identified by using:

Which of the following is not included in the cost of inventory as defined by IAS 2/AASB 102?

The accounting standards governing determination of the cost of inventories are:

Which item should not be included in the income statement's cost of inventory?

Which statement relating to the moving average method of costing inventories, used with the perpetual inventory system, is correct?

Which of the following are reasons for the selling value of some inventory items falling below their cost price? I. Obsolescence II. Damage III. Past use-by date IV. A rise in the market price

Which inventory valuation method gives the highest profit when inventory costs are rising?

Inventory is normally classified in the balance sheet as a:

In relation to inventory, net realisable value is the estimated:

NET Computers sold 20 modems for $60 on 30 April. At that date, the stock card for the modems sold had a total of 50 modems on hand at an average cost of $45.50 each. What is the cost of the modems recognised in the income statement? Assume the weighted average method of costing is used.

The ratio that indicates an entity's overall mark-up on goods sold is the:

The specific identification method of costing inventory would be unsuitable for which of the following?

Assuming rising inventory prices, which statement is correct?

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Accounting for Manufacturing

Cost Accounting Systems

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

Filters

Exam 13: Inventories

The lower of cost or net realisable value procedure is used with which of the following inventory methods? I. FIFO II. LIFO III. Weighted average IV. The perpetual method

The end of the financial year for Ziggie's Trading Company is 30 June 2019. At that date, ending inventory was understated by $3 650. The profit for the year ending 30 June 2019 will be:

Products can be uniquely identified by using:

Which of the following is not included in the cost of inventory as defined by IAS 2/AASB 102?

The accounting standards governing determination of the cost of inventories are:

Which item should not be included in the income statement's cost of inventory?

Which statement relating to the moving average method of costing inventories, used with the perpetual inventory system, is correct?

Which of the following are reasons for the selling value of some inventory items falling below their cost price? I. Obsolescence II. Damage III. Past use-by date IV. A rise in the market price

Which inventory valuation method gives the highest profit when inventory costs are rising?

Inventory is normally classified in the balance sheet as a:

In relation to inventory, net realisable value is the estimated:

NET Computers sold 20 modems for $60 on 30 April. At that date, the stock card for the modems sold had a total of 50 modems on hand at an average cost of $45.50 each. What is the cost of the modems recognised in the income statement? Assume the weighted average method of costing is used.

The ratio that indicates an entity's overall mark-up on goods sold is the:

The specific identification method of costing inventory would be unsuitable for which of the following?

Assuming rising inventory prices, which statement is correct?

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Accounting for Manufacturing

Cost Accounting Systems

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

Filters