- 20 Marks
FA – Nov 2015 – L1 – Q5 – Control accounts and account reconciliations | Inventory
Define inventories and net realisable value under IAS 2, and prepare creditors ledger control accounts for Northern and Southern sectors.
Question
(a) Under the International Financial Reporting Standards, IAS 2 deals with inventories. Define the following terms:
i. Inventories (4 marks)
ii. Net Realisable Value (2 marks)
(b) Alpha Ltd. controls its Creditors’ Accounts by preparing monthly Creditors’ ledger Control Account in two parts, Northern and Southern Sectors.
The following figures were available as at January 31st 2014, when there was a difference of GH¢3,000 on the Trial Balance:
On 31st January, 2014, the officer in charge of the Northern Sector Ledger declared GH¢89,600, while that of the Southern Sector declared GH¢15,016.
You are required to:
i. Prepare Creditors Ledger Control Account for the Northern and Southern Sectors, respectively. (12 marks)
ii. Draw any conclusion you can from the two Control Accounts. (2 marks)
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