A property developer must classify properties that it holds for sale in the course of business as

CHAPTER 10 INVENTORIES

1.Which of the following should not be taken into

account when determining the cost of

inventory?

Recoverable purchase taxes

2.The cost of inventory does not include

Abnormal amount of wasted materials

3.Which of the following costs of conversion

cannot be included in cost of inventory?

factory overhead based on normal capacity

4.Which of the following should be taken into

account when determining the cost of

inventory?

storage cost of part finished goods

5.Cost incurred in bringing the inventory to the

present location and condition include

distribution cost

6. Inventories in compass all of the following

except

Land and other property not held for sale

7.A property developer must classify properties

that it holds for sale in the ordinary course of

business as

Inventory

8.Factory supplies to be consumed in the

production process are reported as

Inventory

9.Which of the following should not be reported

as inventory

Shares and bonds held for received by a

brokerage firm

10.When determining the cost of an inventory

which of the following should not be included?

Interest and loan obtained to purchase the

inventory

11.Why is inventory included in the computation of

net income?

To determine cost of goods sold

12.Which of the following is characteristic of a

perpetual inventory system?

Cost of goods sold is recorded with each

sale

13.Which of the following is incorrect about the

perpetual inventory method?

Purchase returns are recorded by debiting

accounts payable and crediting purchase

returns and allowance

14.An entry debiting inventory and crediting cost of

goods sold would be made when

Merchandise is returned on the perpetual

inventory method is used

CHAPTER 11 INVENTORY COST FLOW

15.IFRS prohibits which cost flow assumption

LIFO

16. What is the inventory pricing procedure in which

the oldest costs rarely have an effect on the

ending inventory?

LIFO

17.In a period of falling prices which inventory

method generally provides the lowest amount

of ending inventory

FIFO

18.Which inventory cost flow assumption would

consistently result in the highest income in a

period of inflation

FIFO

19.The costing of inventory must be deferred until

the end of reporting period under which of the

following method of inventory valuation?

Weighted Average

20.Cost of goods sold is the same under periodic

system and perpetual system using

FIFO

21.The cost of inventories that are not ordinarily

interchangeable and goods produced and

segregated for specific projects shall be

measured using

Specific Identification

22.Which is the reason why the specific

identification method may be considered ideal

for assigning cost to inventory and cost of

goods sold?

The cost flow matches the physical flow

23.IFRS requires the specific identification method

in certain circumstances. Which of the following

is likely to be a circumstance where the specific

identification method can be used?

Unit price is low

24.Which cost flow assumption is used for

inventory when an entity builds townhouses?

Specific Identification

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