Accounting for Inventories (IAS 2) – Page 2

FA – May 2012 – L1 – SB – Q3 – Accounting for Inventories in Accordance with IAS 2

Accounting treatment for containers used in sales and calculation of deposits owed by customers.

Question

Nimyaro Limited sold goods in containers, which are charged out to customers at N15 each. Customers were credited with N10 for each container returned before the expiration of the due dates. At the end of the year, inventories of containers in warehouse and all returnable containers in the hands of customers were valued at N5 each.
On 1 August 2011, the number of such containers were 10,000 and 35,000 respectively. During the year ended 31 July 2011, the following transactions relating to containers took place:
(i) 40,000 were purchased at N7.50 each.
(ii) 150,000 were charged to customers.
(iii) 125,000 were returned by customers.
(iv) 4,000 of the returned containers were useless and sold for N5,000.
(v) On 31 July 2011, 55,000 containers invoiced since 1 July 2011 were in the hands of customers.
You are required to record the above transactions in the books of Nimyaro Limited for
the year ended 31 July 2011 using Containers Suspense Account Method.

Answer

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Tags: Containers, Debtor Control, Sales Accounting
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

Question

Borox Limited makes provision for all known losses and values its inventories at the lower of cost and net realizable value. Which accounting concept is the company complying with?

Answer

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Tags: IAS 2, Inventory, Prudence, Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – May 2012 – L1 – SA – Q24 – Accounting for Inventories in Accordance with IAS 2

Identifying the most appropriate basis for apportioning inventory holding costs among departments.

Question

The most appropriate basis for apportioning inventory holding costs among departments is to use the value of:

Answer

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Tags: Cost Allocation, Inventory
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – May 2012 – L1 – SA – Q19 – Accounting for Inventories in Accordance with IAS 2

Identifying a non-advantage of computerized accounting systems.

Question

Which of the following is NOT an advantage of computer accounting application packages over manual accounting?

A. Generating a variety of accounting reports
B. Improving the quality of financial reporting
C. Allowing the use of common data to update relevant accounting modules
D. Processing larger quantities of data quickly and accurately
E. Allowing non-experts unrestricted use of the application packages

Answer

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Tags: Computerized Accounting, Financial Reporting
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – May 2012 – L1 – SA – Q13 – Accounting for Inventories (IAS 2)

Identifying the best method for inventory valuation according to IAS 2.

Question

According to International Accounting Standard No 2 on “Inventories”, which of the following methods can best be employed for the calculation and valuation of inventories?

A. Last purchase price
B. Last-In-First-Out
C. Base stock
D. Average cost
E. Replacement cost

Answer

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Tags: Financial Statements, IAS 2, Inventory Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – Nov 2011 – L1 – SA – Q6 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing stock in a trading company.

Question

What is the basis of valuing stock in a trading company?

Answer

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Tags: Inventory Valuation, Stock
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q20 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing inventory.

Question

The basis of valuation of inventory is
A. Lower of cost or net realizable value
B. Lower of cost and market value
C. Lower of cost and net realizable value
D. Lower of average cost and market value
E. Lower of average cost and net realizable value

Answer

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Tags: Inventory Valuation, Lower of Cost or Market Value
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2011

FA – Nov 2020 – L1 – SA – Q12 – Accounting for Inventories (IAS 2)

Identifies the costs to be included in inventory valuation under IAS 2 for a manufacturing company.

Question

In accordance with IAS 2 – Inventories, which of the following costs should be included in the valuation of inventories of a manufacturing company?
A. Carriage outwards
B. Carriage inwards
C. General administrative overheads
D. Depreciation of land and buildings
E. Discount allowed

Answer

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Tags: IAS 2, Inventory Valuation, Manufacturing Company
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q5 – Accounting for Inventories in Accordance with IAS 2

Effect of closing inventory overvaluation on reported profit.

Question

The closing inventories of a firm were overvalued by N300,000 due to an overcast error in one of the inventory valuation sheets.

How would the correction of this affect the reported profit?
A. Increase reported profit by N300,000
B. Reduce reported profit by N300,000
C. No effect on the reported profit
D. Increase reported profit by N600,000
E. Reduce reported profit by N600,000

Answer

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Tags: Error Correction, Inventory Valuation, Profit Impact
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2020

FA – May 2013 – L1 – SA – Q23 – Accounting for Inventories (IAS 2)

This question tests the effect of overstating closing inventory on net income.

Question

What is the effect of overstating closing inventory on net income?

Answer

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Tags: Closing Inventory, Financial Statements
Level: Level 1

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

FA – May 2013 – L1 – SA – Q19 – Accounting for Inventories

This question tests the knowledge of items relevant in ascertaining the quantity of containers retained by customers.

Question

Among the following listed items, highlight the one that is irrelevant when ascertaining the quantity of containers retained by the customers:

A. Charged out containers
B. Returned containers
C. Returnable containers
D. Scrapped containers
E. Opening containers with customers

Answer

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Tags: Containers, Financial Reporting, Inventory
Level: Level 1

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

FA – May 2014 – L1 – SA – Q1c – Accounting for Inventories in Accordance with IAS 2

why (IAS 2) on inventories is not applicable to construction contracts

Question

Explain why International Accounting Standard (IAS 2) on inventories is not applicable to construction contracts.

Answer

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Tags: Accounting Standards, Exclusions, IAS 2, Inventories
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q1b – Accounting for Inventories in Accordance with IAS 2

costs to include and exclude when measuring inventory cost under IAS 2.

Question

List the costs which should be included when measuring the cost of inventories and identify any cost which should be excluded.

Answer

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Tags: Accounting Standards, Exclusions, IAS 2, Inventories
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q1a – Accounting for Inventories in Accordance with IAS 2

Definition of inventories

Question

Explain the term “inventories” as defined by International Accounting Standard (IAS 2).

Answer

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Tags: Accounting Standards, Exclusions, IAS 2, Inventories
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q16 – Accounting for Inventories (IAS 2)

This question tests ability to calculate the value of goods transferred to the Sales Department in a manufacturing context.

Question

Fidelis Textile Mills transfers manufactured products to the Sales Department at cost plus 20%. The following production costs were given to you:

N Prime cost 25,000 Production overhead 8,000 Opening inventory of WIP 2,000 Closing inventory of WIP 3,000

Calculate the value of goods transferred to the Sales Department during the period.

Answer

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Tags: Cost Calculation, Inventory Valuation, Manufacturing Costs
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q12 – Accounting for Inventories (IAS 2)

Identifies the accounting treatment for losses or stolen goods on consignment.

Question

What are the accounting entries on consignment for stolen or lost goods?
A. Debit- Consignment Account; Credit- Profit or Loss or Insurance Account, if insured
B. Debit- Profit or Loss or Insurance Account, if insured; Credit- Consignment Account in the consignor’s ledger
C. Debit- Cash Account; Credit- Consignment Account
D. Debit- Goods in Transit Account; Credit- Consignment Account in consignee’s ledger
E. Debit- Consignment Accounts; Credit- Insurance Accounts

Answer

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Tags: Accounting Entries, Consignment, Financial Transactions, Losses
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q2 – Accounting for Inventories in Accordance with IAS 2

Identifies costs included in inventory valuation under IAS 2.

Question

According to IAS 2 on inventories, which of the following costs should be included in valuing the inventories of a manufacturing company?
A. Carriage inwards
B. Carriage outwards
C. General administrative overheads
D. Depreciation of land and building
E. Discount allowed

Answer

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Tags: Cost Accounting, IAS 2, Inventory Valuation, Manufacturing Costs
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – Nov 2013 – L1 – SA – Q28 – Accounting for Inventories in Accordance with IAS 2

Calculating unrealised profit on unsold stock at a branch.

Question

Selling price of goods invoiced to a branch was N172,800 at a mark-up of one-ninth of the cost price. At the end of the accounting period, 50% of the goods remained unsold. Determine the unrealised profit on the unsold stock.

Answer

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Tags: Branch Accounting, Inventory Valuation, Unrealised Profit
Level: Level 1

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

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 2018 – L1 – SA – Q3 – Accounting for Inventories in Accordance with IAS 2

Identifies the items included in the cost of inventories.

Question

Which of the following is included in the cost of inventories?
A. Abnormal amounts of wasted materials, labour, and other production costs
B. Conversion costs
C. Storage costs
D. Administrative overhead
E. Selling costs

Answer

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Tags: Costs, IAS 2, Inventories

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2018

Topic: Accounting for Inventories (IAS 2)

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FA – May 2012 – L1 – SB – Q3 – Accounting for Inventories in Accordance with IAS 2

Accounting treatment for containers used in sales and calculation of deposits owed by customers.

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FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

You're reporting an error for "FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)"

FA – May 2012 – L1 – SA – Q24 – Accounting for Inventories in Accordance with IAS 2

Identifying the most appropriate basis for apportioning inventory holding costs among departments.

You're reporting an error for "FA – May 2012 – L1 – SA – Q24 – Accounting for Inventories in Accordance with IAS 2"

FA – May 2012 – L1 – SA – Q19 – Accounting for Inventories in Accordance with IAS 2

Identifying a non-advantage of computerized accounting systems.

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FA – May 2012 – L1 – SA – Q13 – Accounting for Inventories (IAS 2)

Identifying the best method for inventory valuation according to IAS 2.

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FA – Nov 2011 – L1 – SA – Q6 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing stock in a trading company.

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FA – Nov 2011 – L1 – SA – Q20 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing inventory.

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FA – Nov 2020 – L1 – SA – Q12 – Accounting for Inventories (IAS 2)

Identifies the costs to be included in inventory valuation under IAS 2 for a manufacturing company.

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FA – Nov 2020 – L1 – SA – Q5 – Accounting for Inventories in Accordance with IAS 2

Effect of closing inventory overvaluation on reported profit.

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FA – May 2013 – L1 – SA – Q23 – Accounting for Inventories (IAS 2)

This question tests the effect of overstating closing inventory on net income.

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FA – May 2013 – L1 – SA – Q19 – Accounting for Inventories

This question tests the knowledge of items relevant in ascertaining the quantity of containers retained by customers.

You're reporting an error for "FA – May 2013 – L1 – SA – Q19 – Accounting for Inventories"

FA – May 2014 – L1 – SA – Q1c – Accounting for Inventories in Accordance with IAS 2

why (IAS 2) on inventories is not applicable to construction contracts

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FA – May 2014 – L1 – SA – Q1b – Accounting for Inventories in Accordance with IAS 2

costs to include and exclude when measuring inventory cost under IAS 2.

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FA – May 2014 – L1 – SA – Q1a – Accounting for Inventories in Accordance with IAS 2

Definition of inventories

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FA – May 2014 – L1 – SA – Q16 – Accounting for Inventories (IAS 2)

This question tests ability to calculate the value of goods transferred to the Sales Department in a manufacturing context.

You're reporting an error for "FA – May 2014 – L1 – SA – Q16 – Accounting for Inventories (IAS 2)"

FA – May 2014 – L1 – SA – Q12 – Accounting for Inventories (IAS 2)

Identifies the accounting treatment for losses or stolen goods on consignment.

You're reporting an error for "FA – May 2014 – L1 – SA – Q12 – Accounting for Inventories (IAS 2)"

FA – May 2014 – L1 – SA – Q2 – Accounting for Inventories in Accordance with IAS 2

Identifies costs included in inventory valuation under IAS 2.

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FA – Nov 2013 – L1 – SA – Q28 – Accounting for Inventories in Accordance with IAS 2

Calculating unrealised profit on unsold stock at a branch.

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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.

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FA – May 2018 – L1 – SA – Q3 – Accounting for Inventories in Accordance with IAS 2

Identifies the items included in the cost of inventories.

You're reporting an error for "FA – May 2018 – L1 – SA – Q3 – Accounting for Inventories in Accordance with IAS 2"

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