Inventories

Question 1

Name the accounting standards associated with valuing inventory?

Answer 1

IAS 2

Question 2

How is net realisable value calculated?

Answer 2

Selling price - completion costs - selling costs/distirbution costs = NRV

Question 3

Is carriage inwards or carriage outwards part of COGS

Answer 3

Carriage IN

Question 4

How to value the cost of inventory?

Answer 4

Cost of purchase inc delivery
Cost of conversion inc direct labour
Other costs involved to bring the inventory to its location and condition

Question 5

What is not included in the cost of inventory?

Answer 5

Storage costs of finished goods
Selling costs

Question 6

What is Carriage In and carriage out?

Answer 6

Cost of transporting inventory to the business premesis (COGS)
Transporting inventory to customers (expenses)

Question 7

Accounting for inventory is what principle?

Answer 7

Accruals

Question 8

What is the main principle behind an inventory count?

Answer 8

To ascertain the quality of inventory on hand at the end of the accounting period

Question 9

What is the double entry for carriage in and carriage out?

Answer 9

Carriage in:
Dr Carriage in
Cr Payables

Carriage out
Dr Carriage out
Cr bank account