
Inventories PAS 2 (Set 2: Inventory Estimation)
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Hard
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17 questions
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1.
OPEN ENDED QUESTION
3 mins • 1 pt
2 methods used to estimate inventories
Evaluate responses using AI:
OFF
Answer explanation
1. Gross profit method
2. Retail inventory method
2.
OPEN ENDED QUESTION
3 mins • 1 pt
Gross Profit Method Procedural Approach
Evaluate responses using AI:
OFF
Answer explanation
1. Determine the trend
2. Identify gross profit rate
3. Determine cost ratio
4. Determine net sales
5. Determine cost of goods sold
6. Identify ending inventory
7. Identify inventory loss
3.
OPEN ENDED QUESTION
3 mins • 1 pt
Retail Inventory Method Procedural Approach
Evaluate responses using AI:
OFF
Answer explanation
1. Determine cost ratio
2. Determine net sales
3. Identify ending inventory at retail
4. Identify ending inventory at cost
5. Determine cost of goods sold
4.
OPEN ENDED QUESTION
3 mins • 1 pt
Gross Profit Method
Step 1: Analyze the trend or pattern
Evaluate responses using AI:
OFF
Answer explanation
Analyze the given, find out if there is a pattern regarding the gross profit rate.
If you found one, apply it to identify the gross profit rate
5.
OPEN ENDED QUESTION
3 mins • 1 pt
Gross Profit Method
Step 2: Determine gross profit rate
Evaluate responses using AI:
OFF
Answer explanation
To identify gross profit rate,
1. Know the trend
2. If average gross profit is stated to be used,
Compute GP%:
Gross profit rate yr 1 + yr 2 + yr n
÷
Total number of years
3. If overall gross profit is stated to be used,
Compute GP%:
Gross Profit yr 1 + yr 2 + yr n
÷
Sales yr 1 + yr 2 + yr n
Additional notes:
- if problem is silent, overall gross profit is used.
6.
OPEN ENDED QUESTION
3 mins • 1 pt
Gross Profit Method
Step 3: Determine the net sales
Evaluate responses using AI:
OFF
Answer explanation
Gross sales
Less: sales returns
Or sales return & allowances
Net sales
Additional notes:
Sales discount & sales allowance are ignored.
7.
OPEN ENDED QUESTION
3 mins • 1 pt
Gross Profit Method
Step 4: Determine cost ratio
Evaluate responses using AI:
OFF
Answer explanation
Sales
Less: Cost (Cost ratio)
Gross Profit
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