IAS 2 Inventories Quiz
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Questions and Answers

IAS 2 provides guidance on the cost formulas used to assign costs to inventories. These cost formulas include all of the following except

  • Last-in first-out (LIFO) (correct)
  • Specific identification
  • First-in first-out (FIFO)
  • Weighted average cost
  • According to IAS 2, inventories should be measured at

  • The higher of cost and net realisable value (correct)
  • The average of cost and net realisable value
  • Net realisable value
  • Cost
  • The objective of IAS 2 is to prescribe the accounting treatment for

  • Intangible assets
  • Fixed assets
  • Accounts receivable
  • Inventories (correct)
  • IAS 2 applies to annual periods beginning on or after

    <p>1 January 2005</p> Signup and view all the answers

    Inventories include assets held for sale in the ordinary course of business, such as

    <p>All of the above</p> Signup and view all the answers

    Which of the following is NOT considered an inventory according to IAS 2?

    <p>Assets held for investment purposes</p> Signup and view all the answers

    Which of the following costs should be included in the calculation of inventory cost according to IAS 2?

    <p>Purchase cost and conversion costs</p> Signup and view all the answers

    Under IAS 2, what is the basis for allocating fixed overheads to inventory?

    <p>On a systematic and consistent basis</p> Signup and view all the answers

    According to IAS 2, how should inventories be measured?

    <p>At the lower of cost or net realizable value</p> Signup and view all the answers

    What is the objective of IAS 2?

    <p>To prescribe the accounting treatment for inventories</p> Signup and view all the answers

    Study Notes

    IAS 2 Guidance on Inventories

    • IAS 2 provides guidance on cost formulas used to assign costs to inventories, excluding some formulas.

    Measurement of Inventories

    • Inventories should be measured at the lower of cost and net realizable value (NRV).

    Objective of IAS 2

    • The objective of IAS 2 is to prescribe the accounting treatment for inventories.

    Applicability of IAS 2

    • IAS 2 applies to annual periods beginning on or after a specified date.

    Definition of Inventories

    • Inventories include assets held for sale in the ordinary course of business, such as goods or materials to be sold.

    Exclusions from Inventories

    • The following are NOT considered inventories according to IAS 2:
      • Land and buildings held for sale in the ordinary course of business.

    Inventory Cost Calculation

    • The following costs should be included in the calculation of inventory cost according to IAS 2:
      • Purchase costs, conversion costs, and other costs incurred in bringing the inventories to their present location and condition.

    Allocation of Fixed Overheads

    • The basis for allocating fixed overheads to inventory is based on the normal capacity of production.

    Measurement Basis

    • Inventories should be measured at the lower of cost and net realizable value (NRV).

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    Description

    Test your knowledge of IAS 2 Inventories with this quiz. Learn about the requirements for accounting for inventory and measurement methods.

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