INVENTORIES

Question 1

TWO SYSTEMS IN ACCOUNTING FOR INVENTORIES

Answer 1

1. PERIODIC SYSTEM
2. PERPETUAL SYSTEM

Question 2

THIS CALLS FOR PHYSICAL COUNTING OF GOODS ON HAND AT THE END OF THE ACCOUNTING PERIOD TO DETERMINE QUANTITIES

Answer 2

PERIODIC SYSTEM

Question 3

THIS REQUIRES THE MAINTENANCE OF RECORDS CALLED STOCK CARDS THAT USUALLY OFFER A RUNNING SUMMARY OF THE INVENTORY INFLOW AND OUTFLOW

Answer 3

PERPETUAL SYSTEM

Question 4

THIS IS GENERALLY USED WHEN THE INVIDUAL INVENTORY ITEMS HAVE SMALL PESO INVESTMENT, SUCH AS GROCERIES, HARDWARE AND AUTO PARTS

Answer 4

PERIODIC SYSTEM

Question 5

COMMONLY USED WHERE THE INVENTORY ITEMS TREATED INDIVIDUALLY REPRESENT A RELATIVELY LARGE PESO INVESTMENT SUCH AS JEWELRY AND CARS

Answer 5

PERPETUAL INVENTORY

Question 6

COMPROMISES THE PURCHASE PRICE, IMPORT DUTIES AND IRRECOVERABLE TAXES, FREIGH, HANDLING AND OTHER COSTS DIRECTLY ATTRIBUTABLE TO THE ACQUISITION OF FINISHED GOODS, MATERIALS AND SERVICES

Answer 6

COST OF PURCHASES

Question 7

INCLUDES COST DIRECTLY RELATED TO THE UNITS OF PRODUCTION SUCH AS DIRECT LABOR. IT ALSO INCLUDS A SYSTEMATIC ALLOCATION OF FIXED AND VARIABLE PRODUCTION OVERHEAD THAT IS INCURRED IN CONVERTING MATERIALS INTO FINISHED GOODS

Answer 7

COST OF CONVERSION

Question 8

IS THE INDIRECT COST OF PRODUCTION THAT REMAINS RELATIVELY CONSTANT REGARDLESS OF THE VOLUME OF PRODUCTION.

Answer 8

FIXED PRODUCTION OVERHEAD

Question 9

IS THE INDIRECT COST OF PRODUCTON THAT VARIES DIRECTLY WITH THE VOLUME OF PRODUCTIN

Answer 9

VARIABLE PRODUCTION OVERHEAD

Question 10

IS THE PRODUCTION EXPECTED TO BE ACHIEVED ON AVERAGE OVR A NMBR OF PERIODS OR SEASONS UNDER NORMAL CIRCUMSTANCES TAKIG INTO ACCOUNT THE LOSS OF THE CAPACITY RESULTING FROM PLANNED MAINTENANCE

Answer 10

NORMAL CAPACITY

Question 11

HOW ARE BY-PRODUCTS MEASURED

Answer 11

AT NET REALIZABLE VALUE AND THIS VALUE IS DEDUCTED FROM THE COST OF THE MAIN PRODUCT

Question 12

IS ALLOCATED TO EACH UNIT OF PRODUCTION ON THE BASIS OF THE ACTUAL USE OF THE PRODUCTION FACILITIES

Answer 12

VARIABLE PRODUCTION OVERHEAD

Question 13

WHAT COSTS ARE EXCLUDED FROM THE COST OF INVENTORIES AND RECOGNIZED AS EXPENSE IN THE PERIOD WHEN INCURRED

Answer 13

1. ABNORMAL AMOUNTS
2. STORAGE COSTS
3. ADMINISTRATIVE OVERHEADS
4. DISTRIBUTION OR SELLING COSTS

Question 14

ASSES WHICH ARE HELD FOR SALE IM THE ORDINARY COURSE OF BUSINESS, IN THE PROCESS OF PRODUCTION FOR SUCH SALE OR IN THE FORM OF MATERIALS OR SUPPLES TO BE CONSUMED IN THE PRODUCTION PROCESS OR IN THE RENDERING OF SERVICES (PAS 2, PAR 6)

Answer 14

INVENTORIES