Inventory

Question 1

Double entry for Opening Inventory

Answer 1

Dr Cos, Cr Inventories

Question 2

Double entry for Purchases

Answer 2

Dr Cos, Cr Purchases

Question 3

Double entry for Closing Inventory

Answer 3

Dr Inventory, Cr Cos

Question 4

Inventories should be measured lower of cost and NRV: true or false?

Answer 4

True

Question 5

how do you calculate NRV?

Answer 5

estimated selling price - estimated costs of completion - estimated selling and distribution cost

Question 6

what are the 2 key methods to estimate cost?

Answer 6

FIFO and AVCO

Question 7

FIFO gives lower inventory values and higher profits: true or false?

Answer 7

False -> its higher inventory values AND higher profits

Question 8

how is material amounts of stolen/destroyed inventory treated in FS?

Answer 8

taken out of purchases and included under expenses. the insurance claim is treated as either Other Receivables or Other Income

Question 9

inventory that’s taken out as drawings increases COS: True or false?

Answer 9

False; it reduces COS

Question 10

double entry for inventory taken out as drawings

Answer 10

Dr Drawings, Cr COS

Question 11

FIFO gives lower COS and higher Closing Inventory - True or False?

Answer 11

True