Quiz XI : Topic Inventories (Part II)

91. When determining the net realizable value of inventories, estimates must be made of which of the following:
I. Estimated costs of completion (if any)
II. Expected replacement cost
III. Expected selling price
IV. Estimated selling costs
a. I, II and III only
b. I, II, III and IV
c. II and IV only
d. I, III and IV only
Answer: D
Topic Inventories

92.The inventory standard requires that when inventories are written down to net realizable value, they are written-down:
a.On the basis of industry segment
b.According to geographical segment within the entity
c.On a class-by-class basis
d.On an item-by-item basis
Answer: D

93.Where the net realizable value of inventories falls below cost, the inventory standard requires that:
a.The difference be added to the carrying amount of the inventoriesb.No adjustment be made, but the difference
between net realizable value and cost be disclosed in the notes to the financial statementsc.Inventories be written
down to net realizable valued.Inventories continue to be carried in the statement of financial position at cost
Answer: C

94.The inventory standard applies to the accounting for:

a.Biological assetsb.Work in progress under construction contractsc.Financial instruments d.Materials consumed in the
manufacture of knitting machines for saleAnswer: DTopic Inventories95.Taxes may be included in the cost of inventories
unless they are:a.In respect to the raw materials component of manufactured inventoriesb.In the nature of import
dutiesc.Levied on the entity by a foreign governmentd.Recoverable by the entity from the taxing authority
Answer: D