ACCCOB2_5_Inventories

The periodic inventory system is generally used when the individual inventory items have a small peso inventory, such as grocery items.

• T

• F

The cost of inventory is the sum of cost of purchase and cost of conversion.

• T

• F

Cash discounts permitted on purchase of raw materials should be deducted from inventory, only if taken.

• T

• F

Freight and other handling charges incurred in the transfer of goods from the consignor to consignee are inventoriable by the consignee.

• T

• F

In a period of rising prices, the inventory cost allocation method that tends to result in the highest reported net income is FIFO.

• T

• F

Which of the following accounts is not reported in inventory?

• Held for sale in the ordinary course of business

• Items in the process of production for sale

• Items in the form of materials and supplies to be consumed in the production process or in the rendering of services

• Office supplies

Merchandise shipped FOB destination point on the last day of the year should ordinarily be included in

• the buyer’s inventory balance.

• both the buyer’s and the seller’s inventory balances.

• neither the buyer’s nor seller’s inventory balance.

• the seller’s inventory balance.

The use of a discounts lost account implies that the recorded cost of a purchased inventory item is its

• invoice price less the purchase discount allowable whether taken or not.

• invoice price less the purchase discount taken.

• invoice price plus the purchase discount lost.

• invoice price.

Which cost flow is most appropriate for indistinguishable goods accounted for using the perpetual inventory system?

• Specific identification

• Simple average method

• Moving average method

• FIFO

Which method may be used to record a loss on inventory write down to NRV?

• Allowance method

• Accrual Method

• Cost of goods sold method

• Provisioning Method