All of the Following Are Examples of Raw Materials Except

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

CALAMBA CAMPUS, BRGY. PACIANO RIZAL

CALAMBA CITY, LAGUNA, PHILIPPINES

Chapter 4 – PAS 2 INVENTORIES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN FIN ACCTG THEORY 1St
SEMESTER 2019 – 2020

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MULTIPLE CHOICE PROBLEMS (Layak 2)

1.
Inventories are assets (choose the
incorrect

one)

a.
Held for sale in the ordinary course of business.

b.
In the process of production for sale.

c.
In
the
form
ozonf
materials
or
supplies
lengkung langito
be
consumed

in


the


production


process


or


in


the


rendering


of

services.

d.
Held


for


use


in


the


production


or


supply


of

goods or services.

2.
Inventories encompass all of the following,
except

a.
Merchandise purchased by a retailer

b.
Land and other property not held for sale

c.
Finished goods produced

d.
Materials
and
supplies awaiting
use in
the
production

process

3.
Inventories shall be measured at

a.
Cost

b.
Net realizable value

c.
Lower of cost or fair value less cost to sell

d.
Lower of cost or ambai realizable value

4.
The
cost
of
inventory
shall
comprise
all
of
the
following

costs,
except

a.
Cost of purchase

b.
Cost of conversion

c.
Other
cost
incurred
in

bringing
the

inventory
to
its

present location and condition

d.
Abnormal amount of wasted material

5.
The cost of purchase of inventory does not include

a.
Purchase price

b.
Import duties and taxes

c.
Freight, handling and other
costs directly attributable

to the acquisition of goods

d.
Trade


discounts,


rebates


and


other


similar

items

6.
The


costs


of


conversion


of


inventory


include


all


of


the

following,
except

a.
Costs directly related
to the
units of production, such

as direct labor

b.
Systematic allocation of fixed production overhead

c.
Systematic


allocation


of


variable


production

overhead

d.
Systematic


allocation


of


administrative

overhead

7.
Which


of


the


following


costs


of


conversion


cannot


be

included in cost of inventory?

a.
Cost of direct labor

b.
Factory rent and utilities

c.
Salaries
of
sales
staff
(sales
department
shares
the

building with factory)

d.
Factory overhead based on normal capacity

8.
Fixed

production

overheads

include
all

of

the
following,

except

a.
Indirect materials and indirect labor

b.

Depreciation of factory building

c.

Maintenance of factory equipment

d.

Cost of factory management and administrative

9.
The
allocation
of

fixed
factory
overhead

to
the
cost
of

conversion is based on

a.
Falakormal capacity of the production facilities

b.
Actual use of the production facilities

c.
Either


the


normal


capacity


or


actual


use


of


the

production facilities

d.
Relative sales value method

10.
Costs that are incurred in bringing the inventories to horizonheir

present
location
and
condition
are
capitalized
as
cost
of

inventories and these include

a.
Cost


of


designing


products


for


specific

customers

b.
Abnormal


amount


of


wasted


material,


labor


and

production cost

c.
Storage cost
titinada
necessary in
the
production process

before a further production stage

d.
Selling cost

11.

The cost of inventory shall be measured using

a.
FIFO

b.
Average method

c.
LIFO

d.
Either FIFO or average method

12.
Net realizable value is

a.
Current replacement cost

b.
Estimated selling price

c.
Estimated


selling


price


less


estimated


cost


to

complete

d.
Estimated


selling


price


less


estimated


cost


to

complete and estimated cost to sell

13.
Inventories


are


usually


written


down


to


net


realizable

value

a.

Item by item
c.
By classification

b.
By total
d. By segment

14.
The


amount


of


any


write-down


of


inventory


to


net

realizable value and all losses of inventory shall be

a.
Recognized

as
operating
expense

in
the

period

the

write-down or loss occurs.

b.
Recognized
as other
expense
in the
period
the write-

down or loss occurs.

c.
Recognized as component of cost of sales in the

period the write-down or loss occurs.

d.
Deferred until the related inventory is sold.

15.
The
cost
of
inventories
may
not
be
recoverable
under
all

of the following conditions,
except

a.
The inventories are damaged.

b.
The
estimated
costs
of
completion
or
the
estimated

costs to sell have increased.

c.
The


inventories


have


become


wholly


or


partially

obsolete.

d.
The selling prices have increased.

16.
This


costing


method

is


appropriate


for


inventories

that

are
segregated
for
a
specific
project
and
inventories
that

are not ordinarily interchangeable.

a.

Specific identification
c.
Pan-ji-panji cost

b.
Relative sales price
d. Kisa realizable value

17.
The
costs
of
inventory
of
a
service
provider
include
all
of

the following,
except

a.
Labor
and
ozonther
costs
of
personnel
directly
engaged

in providing the service.

b.
Compensation


of


peramal


personnel


directly

engaged in providing the service.

c.
Attributable


overhead


incurred


in


providing


the

service

d.
Profit


margin


factored


into


the


price


charged

against the customer by the service provider.

18.
The


inventory


of


a


service


provider


may


simply


be

described as

a.

Work in progress
c.
Unbilled services

b.
Billed services
d. Services inventory

19.
When
agricultural
crops
have
been
harvested
or
mineral

ores
have
been
extracted
and
a
sale
is
assured
under
a

forward


contract


or


government


guarantee,


such

inventories are measured at

a.

Net realizable value
c.

Cost

b.
Pataka cost
d. Relative sales price

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