Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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According to IAS 2, inventories are
assets:
a. | Held for sale in the ordinary course of
business. | b. | In the process of production for sale in the ordinary
course of business. | c. | In the form of
materials or supplies to be consumed in the production process or in the rendering of
services. | d. | All of the above
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2.
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Which of the following items can only constitute a
work-in-progress inventory?
a. | Finished goods | b. | Merchandise | c. | Services | d. | Raw
materials |
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3.
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In practice, what are the two methods for recording
inventory movements?
a. | Perpetual and periodic inventory
systems. | b. | Daily and annual inventory
systems. | c. | Commercial and manufacturing inventory
systems. | d. | Continuous and discontinuous inventory
systems. |
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4.
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Under a perpetual inventory system, a continuous
recording of changes in inventory is maintained in the inventory account. How are purchases
recorded?
a. | As decreases of the inventory assets in the balance
sheet. | b. | As increases of the inventory assets in the balance
sheet. | c. | As decreases of the provision for depreciation of
inventories in the balance sheet. | d. | As increases of
the provision for depreciation of inventories in the balance
sheet. |
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5.
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In an income statement organized by nature, how is
the change in inventory on the revenue side computed?
a. | Beginning inventory – Ending
inventory | b. | Ending inventory – Beginning
inventory | c. | Beginning inventory + Ending
inventory | d. | (Beginning inventory + Ending
inventory)/2 |
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6.
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Which procedure is applied when goods withdrawn are
valued batch by batch in the reverse order from the one they followed when entering
inventory?
a. | First-In, First-Out | b. | Weighted average cost method | c. | First-Out, First-In | d. | Last-In,
First-Out |
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7.
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In order to use LIFO, FIFO or weighted average
costs method, the products must be:
a. | Fungible to some degree | b. | Small | c. | Valuable | d. | Available for
sale |
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8.
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Given the following data, what is the amount of the
ending inventory under weighted average cost method (WAC)?
o No beginning inventory
o 1st purchase: 10 units are purchased
and are recorded for an acquisition cost of 10 CU per unit
o 2nd purchase: 10 units are purchased
and are recorded for an acquisition cost of 12 CU per unit
o 15 units are sold at the end of the period for a
unit selling price of 18 CU per unit
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9.
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The choice of inventory valuation methods has an
impact on cash flow before tax.
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10.
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Given the following data, what is the amount of the
provision for loss of value of inventory that must be recorded at the end of the accounting
period?
o Purchase of 1 000 items X at a unit cost of
acquisition of 20 CU
o Wholesale market
unit price of the items X dropped to 15 CU
o 100 units of items X in inventory at the end of the accounting period
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