Cost measurement – NBC Institute

FR – May 2024 – L2 – SA – Q6 – Inventory Accounting

Explains perpetual inventory system, differences in inventory counting, and disclosure requirements.

Question

a. IAS 2 – Inventories sets out the requirements to be followed when accounting for inventory and specifies two methods of recording inventory to allow the calculation of cost of sales.

Required:
i. Explain the term ‘Perpetual inventory system’ and identify FIVE possible causes of differences between the balance on the inventory account and the physical inventory counted. (5 Marks)

ii. State the disclosure requirements for inventory in notes to the financial statements. (5 Marks)

b. Many accountants believe that Block-Chain Technology will enhance the recording of financial transactions globally.

Required:
Explain the term “Block-Chain Technology” and state THREE disadvantages of adopting the technology. (5 Marks)

Answer

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Tags: Cost measurement, Disclosure Requirements, IAS 2, Inventories, Perpetual Inventory System
Level: Level 2

Topic: Inventory Accounting (IAS 2)
Series: MAY 2023

FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

Question

In accordance with IAS2, which of the following statements about the valuation of inventory is correct?

A. Selling price less estimated profit margin may be used to arrive at cost if this gives a reasonable approximation of actual cost
B. LIFO is an accepted valuation method for inventory
C. FIFO is not an accepted valuation method for inventory
D. The cost of goods manufactured by an enterprise will include materials and labour only
E. Inventory items are normally valued at the higher of cost and net realisable value

Answer

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Tags: Accounting Standards, Cost measurement, IAS 2, Inventory Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2013

FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculate the initial cost of equipment including additional expenses.

Question

An entity purchased equipment for ₦20,000. The equipment was transported at ₦86, installation cost was ₦125, abnormal waste of materials was ₦15,000, and training cost of staff on the use of the machine was ₦255. How much should be recorded as the initial cost of the equipment?
A. ₦20,000
B. ₦20,086
C. ₦20,125
D. ₦20,211
E. ₦20,466

Answer

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Tags: Capitalization, Cost measurement, PPE
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: MAY 2021

MA – April 2022 – L2 – Q5B – Introduction to management accounting

Explain four reasons why organizations need to measure costs, including valuation, profit measurement, decision making and control.

Question

Cost measurement reflects the relationships between inputs and outputs. It is designed to provide more accurate information about production, support activities and product cost so that management can focus its attention on the products and processes with the most leverage for increasing profits.

Required:

Explain FOUR (4) reasons why organisations need to measure cost. (4 marks)

Answer

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Tags: Control, Cost measurement, Decision Making, Profit measurement, Valuation
Level: Level 2

Topic: Introduction to management accounting
Series: APR 2023

FR – May 2024 – L2 – SA – Q6 – Inventory Accounting

Explains perpetual inventory system, differences in inventory counting, and disclosure requirements.

Question

a. IAS 2 – Inventories sets out the requirements to be followed when accounting for inventory and specifies two methods of recording inventory to allow the calculation of cost of sales.

ii. State the disclosure requirements for inventory in notes to the financial statements. (5 Marks)

b. Many accountants believe that Block-Chain Technology will enhance the recording of financial transactions globally.

Required:
Explain the term “Block-Chain Technology” and state THREE disadvantages of adopting the technology. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost measurement, Disclosure Requirements, IAS 2, Inventories, Perpetual Inventory System
Level: Level 2

Topic: Inventory Accounting (IAS 2)
Series: MAY 2023

FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

Question

In accordance with IAS2, which of the following statements about the valuation of inventory is correct?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, Cost measurement, IAS 2, Inventory Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2013

FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculate the initial cost of equipment including additional expenses.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capitalization, Cost measurement, PPE
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: MAY 2021

MA – April 2022 – L2 – Q5B – Introduction to management accounting

Explain four reasons why organizations need to measure costs, including valuation, profit measurement, decision making and control.

Question

Required:

Explain FOUR (4) reasons why organisations need to measure cost. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Control, Cost measurement, Decision Making, Profit measurement, Valuation
Level: Level 2

Topic: Introduction to management accounting
Series: APR 2023

Question Tag: Cost measurement

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FR – May 2024 – L2 – SA – Q6 – Inventory Accounting

Explains perpetual inventory system, differences in inventory counting, and disclosure requirements.

FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculate the initial cost of equipment including additional expenses.

MA – April 2022 – L2 – Q5B – Introduction to management accounting

Explain four reasons why organizations need to measure costs, including valuation, profit measurement, decision making and control.

FR – May 2024 – L2 – SA – Q6 – Inventory Accounting

Explains perpetual inventory system, differences in inventory counting, and disclosure requirements.

FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculate the initial cost of equipment including additional expenses.

MA – April 2022 – L2 – Q5B – Introduction to management accounting

Explain four reasons why organizations need to measure costs, including valuation, profit measurement, decision making and control.

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Question Tag: Cost measurement

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FR – May 2024 – L2 – SA – Q6 – Inventory Accounting

Explains perpetual inventory system, differences in inventory counting, and disclosure requirements.

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FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2"

FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculate the initial cost of equipment including additional expenses.

You're reporting an error for "FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)"

MA – April 2022 – L2 – Q5B – Introduction to management accounting

Explain four reasons why organizations need to measure costs, including valuation, profit measurement, decision making and control.

You're reporting an error for "MA – April 2022 – L2 – Q5B – Introduction to management accounting"

FR – May 2024 – L2 – SA – Q6 – Inventory Accounting

Explains perpetual inventory system, differences in inventory counting, and disclosure requirements.

You're reporting an error for "FR – May 2024 – L2 – SA – Q6 – Inventory Accounting"

FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2"

FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculate the initial cost of equipment including additional expenses.

You're reporting an error for "FA – May 2021 – L1 – SA – Q8 – Accounting for Property, Plant, and Equipment (IAS 16)"

MA – April 2022 – L2 – Q5B – Introduction to management accounting

Explain four reasons why organizations need to measure costs, including valuation, profit measurement, decision making and control.

You're reporting an error for "MA – April 2022 – L2 – Q5B – Introduction to management accounting"

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