Question 1

When determining the net realisable value of inventories, estimates must be made of which of the following: I. \quad  Estimated selling costs
II. \quad Expected selling price
III. \quad Expected replacernent cost
IV. \quad Estimated costs of completion (if ary)

Accepted Answer

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

Question 2

When an entity's operating cycle is not clearly identifiable it is assumed to have a duration of:

Accepted Answer

A)   three months.
B)   six months.
C)   12 months.
D)   2 years.

Question 3

Under the periodic inventories approach, an appropriate journal entry to measure closing inventories would be: a. DR Opening irventories (cost of goods sold expense) 
$\quad$CR Irventories (asset)
b. DR Purchases (expense) 
$\quad$CR Irventories (asset)
c. DR Irventories (asset)
$\quad$CR Closing irventories (cost of goods sold expense)
d. DR Purchases returns (cost of goods sold expense) 
$\quad$CR Irventories (asset)

Accepted Answer

The answer of Under the periodic inventories approach, an appropriate...

Question 4

AASB 102 Inventories applies to the accounting for:

Accepted Answer

A)   biological assets.
B)   financial instruments.
C)   work in progress under construction contracts.
D)   materials consumed in the manufacture of lawn mowers for sale.

Question 5

Which of the following is specifically excluded by AASB 102 from the cost of inventories measurement?

Accepted Answer

A)   Trade discounts received
B)   Freight (where the terms of sale are FOB destination) 
C)   Costs of designing inventory for an individual customer.
D)   Costs of converting supplies into specific products for sale.

Question 6

AASB 102 Inventories requires items of inventories that are used by a business as components in a self-constructed property asset to be:

Accepted Answer

A)   added to a 'property construction' provision account.
B)   capitalised and depreciated.
C)   expensed directly into equity in the period in which the items are used.
D)   aggregated into 'cost of goods sold' in the period in which the items are used.

Question 7

Net realisable value of inventories may fall below cost for a number of reasons including: I.  \quad Product obsolescence
II.  \quad Piysical deterioration of irventories
III.  \quad Arl increase in the expected replacernent costs of the irventories
IV.  \quad Arl increase in the estirnated costs of completion
V.  \quad An error in quartities purchased causing overstocking

Accepted Answer

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

Question 8

White Cotton Ltd uses a periodic inventories system and rounds the average unit cost to the nearest dollar. The following data relates to White Cotton Ltd for the year ended 30 June 2021.   Opening inventories 1000 units@average cost of $20 each  January purchases 2500 units@$22 each  February sales 1200 units  March sales returns 50 units  June sales 500 units  July purchases 3000 units @$25 each  August sales 2400 units  October purchases 5000 units @$24 each  November cales 4000 units \begin{array}{ll}	ext { Opening inventories }&1000 	ext { units@average cost of } \$ 20 	ext { each }\	ext { January purchases }&2500 	ext { units@\$22 each }\	ext { February sales } & 1200 	ext { units } \	ext { March sales returns } & 50 	ext { units } \	ext { June sales } & 500 	ext { units }\	ext { July purchases } & 3000 	ext { units @\$25 each } \	ext { August sales } & 2400 	ext { units } \	ext { October purchases } & 5000 	ext { units @\$24 each } \	ext { November cales } & 4000 	ext { units }\end{array} Opening inventories  January purchases  February sales  March sales returns  June sales  July purchases  August sales  October purchases  November cales ​1000 units@average cost of $20 each 2500 units@$22 each 1200 units 50 units 500 units 3000 units @$25 each 2400 units 5000 units @$24 each 4000 units ​  The cost of goods sold for the year using the weighted average method is:

Accepted Answer

A)   $194 400
B)   $186 300
C)   $193 200
D)   $185 150

Question 9

'Net realisable value' of inventories is defined in AASB 102 as the estimated selling price in the ordinary course of business:

Accepted Answer

A)   in a forced sale.
B)   plus the estimated costs necessary to make the sale.
C)   less the estimated costs of completion and the costs necessary to make the sale.
D)   plus the estimated costs of completion and the estimated costs necessary to make the sale.

Question 10

Missy Limited sells household cleaners and had the following items of inventories at reporting date.   Ittem  Quantity  Cost/unit  NRV/unit  Window 50$25$20 cleaners  Vacuum 20$150$160 cleaners \begin{array}{rrr}	ext { Ittem }&	ext { Quantity } & 	ext { Cost/unit } & 	ext { NRV/unit } \	ext { Window }&50 & \$ 25 & \$ 20 \	ext { cleaners }\	ext { Vacuum }&20 & \$ 150 & \$ 160\	ext { cleaners }\end{array} Ittem  Window  cleaners  Vacuum  cleaners ​ Quantity 5020​ Cost/unit $25$150​ NRV/unit $20$160​  What is the adjustment necessary at reporting date?

Accepted Answer

A)   DR Inventories $250
B)   DR Inventories $0
C)   CR Inventories $100
D)   CR Inventories $50

Exam 4: Inventories

Correct Answer
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Correct Answer
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Correct Answer
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'Net realisable value' of inventories is defined in AASB 102 as the estimated selling price in the ordinary course of business:

Correct Answer
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When an entity's operating cycle is not clearly identifiable it is assumed to have a duration of:

Correct Answer
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Which of the following is specifically excluded by AASB 102 from the cost of inventories measurement?

Correct Answer
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Correct Answer
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AASB 102 Inventories applies to the accounting for:

Correct Answer
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AASB 102 Inventories requires items of inventories that are used by a business as components in a self-constructed property asset to be:

Correct Answer
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When determining the net realisable value of inventories, estimates must be made of which of the following: I. $\quad$ Estimated selling costs II. $\quad$ Expected selling price III. $\quad$ Expected replacernent cost IV. $\quad$ Estimated costs of completion (if ary)

Correct Answer
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Exam 4: Inventories

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

'Net realisable value' of inventories is defined in AASB 102 as the estimated selling price in the ordinary course of business:

Correct AnswerverifiedShow Answer

When an entity's operating cycle is not clearly identifiable it is assumed to have a duration of:

Correct AnswerverifiedShow Answer

Which of the following is specifically excluded by AASB 102 from the cost of inventories measurement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

AASB 102 Inventories applies to the accounting for:

Correct AnswerverifiedShow Answer

AASB 102 Inventories requires items of inventories that are used by a business as components in a self-constructed property asset to be:

Correct AnswerverifiedShow Answer

When determining the net realisable value of inventories, estimates must be made of which of the following: I. \quad Estimated selling costs II. \quad Expected selling price III. \quad Expected replacernent cost IV. \quad Estimated costs of completion (if ary)

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

When determining the net realisable value of inventories, estimates must be made of which of the following: I. $\quad$ Estimated selling costs II. $\quad$ Expected selling price III. $\quad$ Expected replacernent cost IV. $\quad$ Estimated costs of completion (if ary)

Correct Answer
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