Inventory Management and Valuation

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Questions and Answers

What should happen to the Accumulated Impairment Losses account when the asset is disposed of?

It should be credited to reflect a gain.

It should be debited to reflect a loss. (correct)

It should be closed permanently.

It should remain unchanged.

What does the Accumulated Impairment Losses account reflect?

The recoverable service amount equivalent to asset disposal.

The loss in future economic benefits beyond depreciation. (correct)

The regular maintenance costs associated with the asset.

The total depreciation of the investment property.

What action must be taken when there is a transfer of impairment loss?

Transfer funds to the operating expenses account.

Record it as a liability increase.

Credit the investment property account.

Debit the Accumulated Impairment Losses account. (correct)

What is considered when determining impairment losses for investment properties?

The carrying amount compared to its recoverable service amount. Signup and view all the answers

When is the Accumulated Impairment Losses account debited?

Following the reclassification to other Property, Plant and Equipment. Signup and view all the answers

What does the Merchandise Inventory account primarily record?

Costs of merchandise purchased or produced for sale Signup and view all the answers

Which of the following items would be recorded under the Welfare Goods for Distribution account?

Canned goods and blankets for disaster relief Signup and view all the answers

If a barangay sells excess manufactured goods, which inventory account is affected?

Merchandise Inventory Signup and view all the answers

What type of items are included in the Other Supplies and Materials for Distribution account?

General supplies and materials not categorized elsewhere Signup and view all the answers

Which account is credited when goods are issued to end-users from the Drugs and Medicines for Distribution?

Drugs and Medicines for Distribution Signup and view all the answers

Which account would include the costs of mosquito nets distributed during a calamity?

Welfare Goods for Distribution Signup and view all the answers

The account used for recording the cost of drugs and medicines intended for distribution is called?

Drugs and Medicines for Distribution Signup and view all the answers

When an item is transferred or issued from the Merchandise Inventory account, what is the account doing?

Reducing the account balance Signup and view all the answers

What is the purpose of the 'Other Prepayments' account?

To record prepayments not categorized under specific accounts. Signup and view all the answers

When should the 'Investment Property - Land' account be credited?

For disposal or reclassification to Property, Plant and Equipment. Signup and view all the answers

How is 'Accumulated Impairment Losses - Investment Property - Land' treated upon asset disposal?

It is debited upon disposal of the asset. Signup and view all the answers

What does the 'Investment Property - Buildings' account specifically record?

Cost of buildings held for earning rentals or capital appreciation. Signup and view all the answers

What actions would cause a credit to the 'Accumulated Depreciation - Investment Property - Buildings' account?

Disposal of the building or reclassification. Signup and view all the answers

What is the main purpose of the 'Investment Property' accounts?

To earn rentals or for capital appreciation. Signup and view all the answers

What must happen for the 'Investment Property - Land' account to be affected negatively?

Acknowledgment of a loss in future economic benefits. Signup and view all the answers

Which of the following accounts is not related to investment properties?

Utility Expenses. Signup and view all the answers

What is the primary purpose of the Office Supplies Inventory account?

To track the value of office supplies acquired for government operations Signup and view all the answers

Which of the following items would NOT normally be recorded in the Accountable Forms, Plates and Stickers Inventory?

Construction tools Signup and view all the answers

How should the Construction Materials Inventory be credited?

For loss, transfer, or issuance to projects Signup and view all the answers

Which type of inventory is used for supplies and materials that do not fit into specific categories?

Other Supplies and Materials Inventory Signup and view all the answers

What should be credited to the Office Supplies Inventory account when items are issued?

The cost of the items that are issued to end-users Signup and view all the answers

Which category would include items such as staple wire removers and punchers?

Office Supplies Inventory Signup and view all the answers

What is a key characteristic of the Accountable Forms Inventory?

Tracks accountable forms that may have face value Signup and view all the answers

What type of account is used to document advances to contractors?

Advances to Contractors Signup and view all the answers

Study Notes

Inventories - Merchandise Held for Sale

Used to record cost/appropriate value of merchandise, property bought/produced for sale
Includes drugs/medicines, finished products from barangay manufacturing
Credited for sales, issuance, or other disposition methods

Inventories - Welfare Goods for Distribution

Records cost of goods for people affected by calamities/disasters
Includes canned goods, noodles, mosquito nets, blankets, etc.
Credited for issuance to end-users or transfers

Inventories - Drugs and Medicines for Distribution

Records cost of drugs/medicines purchased/received for distribution
Credited for issuance to end-users or transfers

Inventories - Other Supplies and Materials for Distribution

Records cost of purchased/acquired inventories, not under specific inventory accounts
Credited for issuance to end-users or transfers

Inventories - Office Supplies

Records cost or value of purchased office supplies (bond paper, inks, staples, etc.)
Credited for issuance to end-users, transfers, loss, or disposal

Inventories - Accountable Forms, Plates, and Stickers

Records cost of accountable forms used for government operations (official receipts, tickets, stickers, etc.)
Credited for issuance to end-users, transfers, loss, or disposal

Inventories - Construction Materials

Records cost of construction materials purchased/acquired for stock
Credited for issuance for construction, repair, rehabilitation of govt facilities

Inventories - Other Supplies and Materials

Records cost of purchased supplies/materials not under specific inventory accounts
Credited for issuance, transfers, loss, or disposal

Prepayments - Advances to Contractors

Records amount advanced to contractors as authorized by law
Credited for recoupment of advances

Prepayments - Other Prepayments

Records prepayments not under other specific prepayment accounts
Credited for expended amounts

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Description

This quiz covers various types of inventories including merchandise held for sale, welfare goods, drugs and medicines for distribution, and office supplies. It focuses on the recording and valuation of these inventories, essential for effective inventory management. Test your knowledge on handling different inventory accounts and their significance in distribution.