Chapter 7: Inventories

Question 1

Inventories held for sale or distribution in the ordinary course of operations.

Answer 1

Finished Goods

Question 2

Inventories in the process of production for sale or distribution.

Answer 2

Work in Process

Question 3

Inventories in the form of materials or supplies to be consumed in the production process or distributed in the rendering of services.

Answer 3

Raw Materials and Supplies

Question 4

Inventories including medicines for sale in government pharmacies.

Answer 4

Inventory Held for Sale

Question 5

Inventories including rice and other welfare goods held for distribution.

Answer 5

Inventory Held for Distribution

Question 6

Inventories including raw materials and work-in-process.

Answer 6

Inventory Held for Manufacturing

Question 7

Inventories including office supplies inventory.

Answer 7

Inventory Held for Consumption

Question 8

Consists of machinery, equipment, furniture and fixtures, and similar items that are not capitalized as PPE.

Answer 8

Semi-Expendable Property

Question 9

How much is the threshold for a PPE to not be capitalized?

Answer 9

Below the Php 15,000 capitalization threshold.

Question 10

Initial Measurement of Inventories

Answer 10

Cost

Question 11

Subsequent Measurement of Goods Held for Sale

Answer 11

Lower of Cost and Net Realizable Value

Question 12

Subsequent Measurement of Goods Held for Distribution

Answer 12

Lower of Cost and Current Replacement Cost

Question 13

Cost comprises the following:

Answer 13

Purchase Cost (excluding trade discounts, rebates, and other deductions)
Direct Costs

Question 14

Cost excludes:

Answer 14

Abnormal amounts of wasted M, L, OH.
Selling costs
Administrative overheads

Question 15

Initial Measurement of Inventories Received from Non-Exchange Transactions

Answer 15

Fair Value

Question 16

Initial Measurement of Agricultural Produce

Answer 16

Fair Value at the Point of Harvest

Question 17

This is the estimated selling prices less estimated costs of completion and estimated selling/disposal costs.

Answer 17

Net Realizable Value (NRV)

Question 18

This is the cost the entity would incur to acquire the asset on the reporting date.

Answer 18

Current Replacement Cost

Question 19

This shall be used for items that are not ordinarily interchangeable and those that are segregated for specific projects.

Answer 19

Specific Identification

Question 20

This shall be used for large numbers of items of inventory that are ordinarily interchangeable. This shall be also applied under a perpetual inventory system.

Answer 20

Weighted Average Cost

Question 21

What inventory system shall a government entity use?

Answer 21

Perpetual Inventory System

Question 22

Are the FIFO Cost Formula and Periodic Inventory System used by government entities?

Answer 22

Naur.

Question 23

When is an inventory recognized as an expense?

Answer 23

When it is sold, distributed, exchanged, or consumed.

Question 24

The write-down of inventory to its NRV or Current Replacement Cost is recognized as:

Answer 24

Expense

Question 25

This is prepared ONLY by END USERS to request for the purchase of items not available in stock and is also the basis for preparing the Purchase Order.

Answer 25

Purchase Request

Question 26

This refers to the individuals who will actually be using the items.

Answer 26

End Users

Question 27

This is a document prepared by an authorized official and is issued to the supplier when making a purchase. It also serves as the contract between the entity and supplier.

Answer 27

Purchase Order

Question 28

This report is prepared by the Property/Supply Division when they sign the “received” portion of the Delivery Receipt. This will also be used by the Property Inspector in inspecting and accepting the delivered items.

Answer 28

Inspection and Acceptance Report (IAR)

Question 29

He/She inspects the conformance of the delivered items with the specifications in both the PO and DR and indicates the result of the inspection.

Answer 29

Property Inspector

Question 30

This is where the accepted deliveries are recorded by PROPERTY/SUPPLY DIVISION wherein the quantities of all receipts and issuances of inventory as well as the available balance are shown.

Answer 30

Stock Cards (SC)

Question 31

This is where the accepted deliveries are recorded by ACCOUNTING DIVISION.

Answer 31

Supplies Ledger Card (SLC)

Question 32

This is prepared by the PROPERTY/SUPPLY DIVISION for processing of payment.

Answer 32

Disbursement Voucher (DV)

Question 33

This is prepared by END USERS to request for the issuance of items available in stock.

Answer 33

Requisition and Issue Slip (RIS)

Question 34

This is prepared by the PROPERTY/SUPPLY DIVISION which shall be used by the Stock Card keeper in updating the stock cards and the Accounting Division in journalizing the items issued.

Answer 34

Report of Supplies and Materials Issued (RSMI)

Question 35

Prepared by the PROPERTY/SUPPLY CUSTODIAN to report wasted materials.

Answer 35

Waste Materials Report

Question 36

Used in reporting the results of physical counts. It also shows the inventory balance as well as any shortages or overages.

Answer 36

Report on the Physical Count of Inventories

Question 37

Used to report the movement and status of accountable forms in the possession of an officer.

Answer 37

Report of Accountability for Accountable Forms

Question 38

Prepared when issuing semi-expendable property.

Answer 38

Inventory Custodian Slip