7. Inventories

Question 1

Inventories

Answer 1

Items which are held for a sale n the ordinary course of business or in the process of production for such a sale

Question 2

What is inventory looked as on DEADCLIC

Answer 2

Expense

Question 3

What’s the formula for cost of goods sold

Answer 3

Cost of goods sold = open inventory + purchases - closing inventory

Question 4

What are the end of year procedures of cost of goods sold

Answer 4

> Physical count the inventory
Value the inventory
Adjust the ledger accounts to reflect the value of closing inventory

Question 5

What’s NRV (Net realisable value

Answer 5

The expected selling price of the inventory, less any further costs to be incurred such as estimated costs of completion and selling/distribution

Question 6

What’s the formula for Net realisable value

Answer 6

Selling price (SP) - Selling cost (SC) - Cost of completion (CC) = NRV

Question 7

What’s reconciliation

Answer 7

Quantity counted is compared to the inventory records. All discrepancies must be investigated

Question 8

What types of discrepancies could be found on a reconciliation

Answer 8

> Errors in recording deliveries/issues
Stolen items
Damaged items
Inventory sold but not yet dispatched

Question 9

What’s type of cost does direct labour represent

Answer 9

Inventory costs