I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART D: RECORDING TRANSACTIONS AND EVENTS 

 

130

 

1 

When is an inventory account used?  

2 

How is closing inventory incorporated in the financial statements?  

A 

DEBIT: statement of profit or loss 

CREDIT: statement of financial position 

B 

DEBIT: statement of financial position 

CREDIT: statement of profit or loss 

3 

What is 'continuous' inventory counting?  

4 

An item of inventory was purchased for $10. However, due to a fall in demand, its selling price will be 

only $8. In addition, further costs will be incurred prior to sale of $1. What is the NRV? 

 A 

$7 

 B 

$8 

 C 

$10 

 D 

$11 

5 

Why is inventory not valued at expected selling price?  

6 

When valuing inventory, the following methods are available. 

1 FIFO 

2 AVCO 

3 LIFO 

4 Standard 

cost 

Which methods are allowable under IAS 2 Inventories? 

A 

1, 2, 3 

B 

1, 2, 3, 4 

C 1 

only 

D 1, 

2 

7 

What is included in the cost of purchase of inventories according to IAS 2?  

A 

Purchase price less trade discount 

B 

Purchase price plus transport costs less trade discount 

C 

Purchase price less import duties less trade discount 

D 

Purchase price plus import duties plus transport costs less trade discount 

8 

What type of costs should be recognised as an expense, not as part of the cost of inventory?  

9 

What are the most likely situations when the NRV of inventories falls below cost? 

 

 

 

 

 

 

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CHAPTER 7  

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  INVENTORY