Net Realisable Value – NBC Institute

AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence

Explains the determination of net realisable value and outlines audit procedures for verifying inventory valuation.

Question

b) The management of Zenda Plc have told you that inventory is correctly valued at the lower of cost and net realisable value. As the Auditor of Zenda Plc, you have already satisfied yourself that cost is correctly determined.

Required:
i) Explain how to determine net realisable value. (2 marks)
ii) Explain FOUR (4) audit procedures that you will perform to ensure that net realisable value of the inventory is at or above cost. (8 marks)

Answer

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Tags: Audit Procedures, Inventory, Net Realisable Value, Substantive Testing
Level: Level 2

Topic: Audit and Assurance Evidence
Series: APR 2022

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)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Reconciliations, Control Accounts, Creditors Ledger, Inventory, Net Realisable Value
Level: Level 1

Topic: Control accounts and account reconciliations, Inventory
Series: NOV 2015

AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence

Explains the determination of net realisable value and outlines audit procedures for verifying inventory valuation.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Inventory, Net Realisable Value, Substantive Testing
Level: Level 2

Topic: Audit and Assurance Evidence
Series: APR 2022

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.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Reconciliations, Control Accounts, Creditors Ledger, Inventory, Net Realisable Value
Level: Level 1

Topic: Control accounts and account reconciliations, Inventory
Series: NOV 2015

Question Tag: Net Realisable Value

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AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence

Explains the determination of net realisable value and outlines audit procedures for verifying inventory valuation.

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.

AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence

Explains the determination of net realisable value and outlines audit procedures for verifying inventory valuation.

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.

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Question Tag: Net Realisable Value

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AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence

Explains the determination of net realisable value and outlines audit procedures for verifying inventory valuation.

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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.

You're reporting an error for "FA – Nov 2015 – L1 – Q5 – Control accounts and account reconciliations | Inventory"

AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence

Explains the determination of net realisable value and outlines audit procedures for verifying inventory valuation.

You're reporting an error for "AA – April 2022 – L2 – Q3b – Audit and Assurance Evidence"

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.

You're reporting an error for "FA – Nov 2015 – L1 – Q5 – Control accounts and account reconciliations | Inventory"

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