La Consolacion College - Tanauan City, Batangas BSA 1221 LOPEZ, SHERYL M

La Consolacion College - Tanauan City, Batangas

BSA 1221

LOPEZ, SHERYL M. BSMA 1-B

QUIZ ACCT04 BSMA 1 A 7 1 B

PAS 2 Inventories

1)Which of the following is added to the cost of inventories?

a.            Storage costs of part-finished goods

b.            Trade discounts

c.             Refundable purchase taxes

d.            Administrative costs

2.            Which of the following costs are included in the cost of inventories? a. Transport costs for raw materials

b.            Abnormal material usage

c.             Storage costs relating to finished goods

d.            Administrative and general overhead

3.            How should trade discounts be dealt with when valuing inventories at the lower of cost and net realisable value (NRV) according to PAS 2?

a.            Added to cost

b.            Ignored

c.             Deducted in arriving at NRV d. Deducted from cost

4.            The cost of inventory should not include

I.             Purchase price.

II.            Import duties and other taxes.

III.           Abnormal amounts of wasted materials.

IV.          Administrative overhead.

V.            Fixed and variable production overhead.

VI.          Selling costs.

a. II, III, IV, V b. III, IV, VI

c.             I, II

d.            II, III, IV, V, VI

5.            The Coronet Company has a cost card in relation to an item of goods manufactured as follows:

According to PAS 2, at what figure should the item be valued in inventory?

a.            88

b.            76

c.             98 d. 94

6.            Inventories are measured at

a.            Lower of cost and fair value.

b.            Lower of cost and net realizable value.

c.             Lower of cost and nominal value.

d.            Lower of cost and net selling price.

e.            Choices b and d.

7.            Which of the following costs of conversion cannot be included in cost of inventory?

a.            Cost of direct labor.

b.            Factory rent and utilities.

c.             Salaries of sales staf f (sales department shares the building with factory supervisor).

d.            Factory overheads based on normal capacity.

Use the following information for the next three questions:

Entity A, a trading entity, buys and sells Product Z. Movements in the inventory of Product Z during the period are as follows:

                inventory           

7              Purchase             300         18           5,400

12           Sale        320                        

21           Purchase             200         21           4,200

8.            How much is the ending inventory under the FIFO cost formula? a. 6,540

b.  5,840

c.  5,640

d.  4,860

9.            How much is the ending inventory under the Weighted Average cost formula? (The average is calculated on a periodic basis.)

a.  5,180

b.  5,280

c.  5,460

d.  5,580

10.          How much is the ending inventory under the Weighted Average cost formula? (The average is calculated as each additional purchase is made, i.e., ‘moving average’.)

a.  5,860

b.  5,680

c.  5,580

d.  5,380