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18 Questions

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Inventories

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Questions and Answers

Which of the following is considered an inventory asset?

Cash

Raw materials (correct)

Accounts payable

Buildings

What is net realizable value?

The estimated value of a liability

The estimated profit from a sale

The estimated selling price of an asset (correct)

The estimated cost to realize a sale

When do grapes become inventory for the wine company?

After the wine's bottles are sold

Before the harvest

Never, they are always considered biological assets

During the one-year process cycle (correct)

According to IAS 2, which method is recommended for evaluating inventory of interchangeable goods?

FIFO Signup and view all the answers

In the FIFO method, which quantities are the first to be sold or used in production?

Oldest purchased or produced quantities Signup and view all the answers

When is the LIFO (Last In First Out) method applicable for evaluating inventory?

Under IFRS Signup and view all the answers

When should a new category be created for inventory evaluation?

When there is a new price Signup and view all the answers

Which method of inventory evaluation is NOT allowed by IAS 2?

LIFO Signup and view all the answers

What is the main purpose of the journal entry at the end of the year?

To represent the difference between the beginning and end inventories in profit and loss Signup and view all the answers

What is the difference between IAS 2 and OIC 13 in terms of allowed evaluation methods?

IAS 2 allows specific costs and weighted average cost, while OIC 13 allows FIFO and LIFO Signup and view all the answers

According to IAS 2, which of the following is NOT considered as an inventory?

Raw materials Signup and view all the answers

According to IAS 2, when should inventories be recognized?

When risks and rewards of ownership have transferred Signup and view all the answers

According to IAS 2, how should inventories be evaluated?

At the lowest between cost and net realizable value Signup and view all the answers

According to IAS 2, what does net realizable value represent?

The expected selling price for partially finished and finished products Signup and view all the answers

Which method is used to value inventory in this example?

Weighted average cost Signup and view all the answers

When is an impairment recorded for inventories?

When inventories become damaged or obsolete Signup and view all the answers

How is the net realizable value (NRV) of inventories calculated in this example?

By considering the selling prices of inventories Signup and view all the answers

What is the reason for recording an impairment of Euro 120 in this example?

The net realizable value (NRV) of inventories has decreased Signup and view all the answers