Quiz on IAS 2 - Inventories

What is included in the cost of inventories according to IAS 2?

• Only the purchase price

• Only selling costs

• All costs incurred to bring inventories to their present location and condition

• Only storage costs

Which of the following is NOT a cost allocation technique mentioned?

• Weighted average

• Direct costing

• Retail method

• Standard cost

What does NRV stand for in inventory measurement?

• Net recorded value

• Net return value

• Net revenue value

• Net realizable value

When should inventory be written down to NRV?

• When inventory is purchased

• When NRV is greater than cost

• When NRV is lower than cost

• When inventory is sold

What is the first step in the measurement of inventories?

• Determine net realizable value

• Record at lower of cost and NRV

• Apply cost allocation techniques

• Determine the cost of inventories

What should be done if NRV is lower than the cost?

• No adjustment is needed

• Write down inventory to NRV

• Increase the inventory value

• Record as a gain

Which of the following is a component of NRV calculation?

• Closing balance

• Opening balance

• Estimated selling price

• Cost of goods sold

What happens if inventories are written down to NRV and conditions improve?

• The write-down cannot be reversed

• The write-down can be reversed up to the original cost

• The inventory value must be increased

• No action is required

What is the purpose of measuring inventory at the lower of cost and NRV?

• To maximize profit

• To reduce costs

• To ensure accurate financial reporting

• To increase inventory value

Which of the following costs is included in the cost of inventories?

• Selling costs

• Research and development costs

• Borrowing costs related to inventories

• Marketing costs