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WorksheetsInventories
Total questions: 16
Worksheet time: 16mins
Inventory is a/an _______________.
current asset
non-current asset
current liability
expense
State the valuation of inventory.
Inventory is valued at cost plus net realisable value.
Inventory is valued at higher of cost and net realisable value.
Inventory is valued at net realisable value only.
Inventory is valued at lower of cost and net realisable value.
On 1 July 2020, John had an inventory value of $1,000. A fire broke out and damaged goods costing $200. What was the value of the impairment loss on inventory?
$1,000
$200
$1200
$800
Cost of inventory = $5,000
Net realisable value = $7,000
What is the value of impairment loss on inventory?
$0
$2000
$5000
$7000
On 1 June 2020, ABC Trading has a inventory value of $1,000. On 30 June 2020, the net realisable value of the inventory is $890. Prepare the journal entry to adjust the inventory value.
Dr Inventory $890
Cr Impairment loss on inventory $890
Dr Inventory $110
Cr Impairment loss on inventory $110
Dr Impairment loss on inventory $890
Cr Inventory $890
Dr Impairment loss on inventory $110
Cr Inventory $110
Inventory are goods purchased from suppliers to sell to customers.
True
False
Impairment loss on inventory is a/an _________.
expense
liability
asset
income
Cost of inventory = $100
Net realisable value = $20
What is the value of impairment loss on inventory?
$0
$20
$80
$100
The valuation of inventory at the lower of cost and net realisable value is based on _________ theory.
matching
prudence
objectivity
historical cost
Given cost= $500, net realisable value = $300, the effect of not adjusting the inventory value on the statement of financial performance is ________.
Overstate income, overstate profit.
Understate expense, overstate profit
Understate income, understate profit
Overstate expense, understate profit
On 1 July 2020, Audio Trading has 20 units of inventory valued at $400.
During the month of July, Audio Trading purchased:
30 units for $650
20 units for $850
Audio Trading sold 50 units of inventory at $2,100 on 31 July 2020.
What is the cost of sales for the month of July?
$400 + $650 = $1,050
650 + $850 = $1,500
$400 + $650 + $850 = $1,900
$2,100
Business purchased goods costing $500 from credit supplier Tay. Prepare the journal entry.
Dr Inventory $500
Cr Trade Payable - Tay $500
Dr Trade receivable - Tay $500
Cr Inventory $500
Dr Impairment loss on inventory $500
Cr Inventory $500
Dr Inventory $500
Cr Cash at bank $500
Business sold goods to credit customer- Chen at $1,600.
The cost price of the goods sold was $600.
Prepare the journal entries to record this transaction.
Dr Trade receivable - Chen $1,000
Cr Sales revenue $1,000
Dr Trade receivable - Chen $1,600
Cr Sales revenue $1,600
Dr Cost of sales $600
Cr Inventory $600
Dr Trade receivable - Chen $1,600
Cr Inventory $1,600
Dr Cost of sales $600
Cr Sales revenue $600
Dr Trade receivable - Chen $600
Cr Sales revenue $600
Dr Cost of sales $1, 600
Cr Inventory $1,600
Cost price of goods = $100
Import tax = $80
Freight charges = $20
Salaries of workers hired to repack = $60
Wages of salesperson to sell goods = $40
What is the cost of inventory purchased?
$100
$200
$260
$300
What are the characteristics of trade discount?
given at the point of buying/selling
given at the point of payment
encourage early/prompt payment
encourage bulk purchases
recorded as discount received/allowed
What are the characteristics of cash discount?
given at the point of buying/selling
given at the point of payment
encourage early/prompt payment
encourage bulk purchases
recorded as discount received/allowed
