Question 1

Under the periodic inventory approach an appropriate journal entry to measure closing inventory is:

Accepted Answer

A) 
DR Opening inventory (cost of sales expense) 
CR Inventory (asset); 
B)  
DR Purchases (expense) 
CR Inventory (asset); 
C)  
DR Inventory (asset) 
CR Closing inventory (cost of sales expense); 
D) 
DR Purchases returns (cost of sales expense) 
CR Inventory (asset). 
A) 
DR Opening inventory (cost of sales expense) 
CR Inventory (asset); 
B)  
DR Purchases (expense) 
CR Inventory (asset); 
C)  
DR Inventory (asset) 
CR Closing inventory (cost of sales expense); 
D) 
DR Purchases returns (cost of sales expense) 
CR Inventory (asset).

Question 2

IAS 2 requires separate disclosure of:

Accepted Answer

A)  where there has been abnormal wastage which has been expensed; 
B)  details of inventory pledged as security for loans; 
C)  interest costs which have been capitalised into the cost of inventory; 
D)  details of key terms of purchase. 
A)  where there has been abnormal wastage which has been expensed; 
B)  details of inventory pledged as security for loans; 
C)  interest costs which have been capitalised into the cost of inventory; 
D)  details of key terms of purchase.

Question 3

Stock take discrepancies between a count sheet and recorded quantities in the ledger may arise due to:
 I Theft of stock during the year
II Stock purchased under FOB destination terms being in transit at period end
III A consignee including consignment stock in their physical count
IV Sales returns not being processed into the ledger

Accepted Answer

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

Question 4

When determining the net realisable value of inventory, estimates must be made of the following:
 I Estimated costs of completion (if any)
II Expected replacement cost
III Expected selling price
IV Estimated selling costs

Accepted Answer

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

Question 5

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.

Question 6

The terms '2/7' appearing on an invoice for the sale/purchase of inventory means that the buyer:

Accepted Answer

A)  will receive a 2% discount if paid within 7 days of the invoice date; 
B)  will receive a 7% discount if paid within 2 days of the invoice date; 
C)  has 7 days from the invoice date to pay or will be charged a 2% surcharge; 
D)  has 2 days from the invoice date to pay or will be charged a 7% surcharge. 
A)  will receive a 2% discount if paid within 7 days of the invoice date; 
B)  will receive a 7% discount if paid within 2 days of the invoice date; 
C)  has 7 days from the invoice date to pay or will be charged a 2% surcharge; 
D)  has 2 days from the invoice date to pay or will be charged a 7% surcharge.

Question 7

The measurement rule for inventories, mandated by IAS 2 Inventories, is:

Accepted Answer

A)  lower of fair value and selling price; 
B)  lower of cost and net realisable value; 
C)  higher of initial cost and realisable value; 
D)  higher of completion costs and replacement costs. 
A)  lower of fair value and selling price; 
B)  lower of cost and net realisable value; 
C)  higher of initial cost and realisable value; 
D)  higher of completion costs and replacement costs.

Question 8

'Net realisable value' of inventory is defined as the net amount that an entity 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.

Under the periodic inventory approach an appropriate journal entry to measure closing inventory is:

IAS 2 requires separate disclosure of:

When determining the net realisable value of inventory, estimates must be made of the following: I Estimated costs of completion (if any) II Expected replacement cost III Expected selling price IV Estimated selling costs

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

The terms '2/7' appearing on an invoice for the sale/purchase of inventory means that the buyer:

The measurement rule for inventories, mandated by IAS 2 Inventories, is:

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

The Iasb and Its Conceptual Framework

Owners Equity: Share Capital and Reserves

Fair Value Measurement

Revenue From Contracts With Customers

Provisions, Contingent Liabilities and Contingent Assets

Financial Instruments

Share-Based Payment

Employee Benefits

Leases

Impairment of Assets

Financial Statement Presentation

Statement of Cash Flows

Operating Segments

Other Key Notes Disclosures

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Translation of the Financial Statements of Foreign Entities

Agriculture

Associates and Joint Ventures

Joint Arrangements

Revenue From Contracts With Customers

Financial Instruments

Financial Instruments

Share-Based Payment

Exploration for and Evaluation of Mineral Resources

Filters

Exam 8: Inventories

Under the periodic inventory approach an appropriate journal entry to measure closing inventory is:

IAS 2 requires separate disclosure of:

When determining the net realisable value of inventory, estimates must be made of the following: I Estimated costs of completion (if any) II Expected replacement cost III Expected selling price IV Estimated selling costs

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

The terms '2/7' appearing on an invoice for the sale/purchase of inventory means that the buyer:

The measurement rule for inventories, mandated by IAS 2 Inventories, is:

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

The Iasb and Its Conceptual Framework

Owners Equity: Share Capital and Reserves

Fair Value Measurement

Revenue From Contracts With Customers

Provisions, Contingent Liabilities and Contingent Assets

Financial Instruments

Share-Based Payment

Employee Benefits

Leases

Impairment of Assets

Financial Statement Presentation

Statement of Cash Flows

Operating Segments

Other Key Notes Disclosures

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Translation of the Financial Statements of Foreign Entities

Agriculture

Associates and Joint Ventures

Joint Arrangements

Revenue From Contracts With Customers

Financial Instruments

Financial Instruments

Share-Based Payment

Exploration for and Evaluation of Mineral Resources

Filters