Trading Stock

Question 1

___________ is defined in section EB 2of the ITA as property that a person who owns or carries on a business has for the purpose of selling or exchanging in the ordinary course of the business.
Exceptions to the definition of trading stock are set out in section EB2 and include land, livestock and also financial arrangements subject to the financial arrangement rules amongst others.

Answer 1

Trading stock

Question 2

Trading stock is defined in section EB 2of the ITA as property that a person who owns or carries on a business has for the purpose of ____________ in the ordinary course of the business.
Exceptions to the definition of trading stock are set out in section EB2 and include land, livestock and also financial arrangements subject to the financial arrangement rules amongst others.

Answer 2

selling or exchanging

Question 3

Trading stock is defined in section EB 2of the ITA as property that a person who owns or carries on a business has for the purpose of selling or exchanging in the ___________.
Exceptions to the definition of trading stock are set out in section EB2 and include land, livestock not used in a dealing business and also financial arrangements subject to the financial arrangement rules amongst others.

Answer 3

ordinary course of the business

Question 4

Trading stock is defined in section EB 2of the ITA as property that a person who owns or carries on a business has for the purpose of selling or exchanging in the ordinary course of the business.
Exceptions to the definition of trading stock are set out in section EB2 and include ___________, livestock not used in a dealing business and also financial arrangements subject to the financial arrangement rules amongst others.

Answer 4

land

Question 5

Trading stock is defined in section EB 2of the ITA as property that a person who owns or carries on a business has for the purpose of selling or exchanging in the ordinary course of the business.
Exceptions to the definition of trading stock are set out in section EB2 and include land, __________ and also financial arrangements subject to the financial arrangement rules amongst others.

Answer 5

livestock not used in a dealing business

Question 6

Trading stock is defined in section EB 2of the ITA as property that a person who owns or carries on a business has for the purpose of selling or exchanging in the ordinary course of the business.
Exceptions to the definition of trading stock are set out in section EB2 and include land, livestock and also __________________________ amongst others.

Answer 6

financial arrangements subject to the financial arrangement rules

Question 7

Under the ITA:-
The value of trading stock at the end of the year is _________; and
The value of trading stock at the beginning of the year is an allowable deduction.
MTG

Answer 7

income

Question 8

Under the ITA:-
The value of trading stock at the end of the year is income; and
The value of trading stock at the beginning of the year is an _____________.
MTG

Answer 8

Allowable deduction

Question 9

Before a taxpayer can calculate net income or loss for their business for an income year, the amount of cost of goods sold for the year must be determined. This is arrived at by using the following formula:
__________________ + total purchases in the year – closing stock = cost of goods sold.
MTG

Answer 9

Opening stock

Question 10

A company buys up old washing machines and refrigerators and renovates them for resale. For the 20X4 income year, it had opening stock of $40,000 (as at 1 April 20X3) and closing stock of $65,000 (as at 31 March 20X4). Its annual sales came to $90,000 and it spent $30,000 acquiring old units, $35,000 on renovation and labour and $2,000 on new parts during the year.
How is net income calculated in this instance?

Answer 10

Sales	 										90,000	
Less cost of sales:
          	Opening stock							40,000
	Purchases							30,000
	Direct labour							35,000
	parts								  2,000
								            107,000	
	Less closing stock						65,000

										42,000 Amount to be included in income for the year						48,000

Question 11

A company buys up old washing machines and refrigerators and renovates them for resale. For the 20X4 income year, it had opening stock of $40,000 (as at 1 April 20X3) and closing stock of $65,000 (as at 31 March 20X4). Its annual sales came to $90,000 and it spent $30,000 acquiring old units, $35,000 on renovation and labour and $2,000 on new parts during the year.
How are the new parts treated in this example when calculating net income?

Answer 11

$		   $
Sales	 										90,000	
Less cost of sales:
          	Opening stock							40,000
	Purchases							30,000
	Direct labour							35,000
	parts								  2,000
								            107,000	
	Less closing stock						65,000

										42,000 Amount to be included in income for the year						48,000

Question 12

Although services form part of inventory under ___________ Inventories, they are not included as trading stock for income tax purposes under section YA 1.

Answer 12

NZIAS 2

Question 13

Although services form part of inventory under NZIAS 2 Inventories, they are not included as____________for income tax purposes under section YA 1.

Answer 13

Trading stock

Question 14

Although _____________ form part of inventory under NZIAS 2 Inventories, they are not included as trading stock for income tax purposes under section YA 1.

Answer 14

services

Question 15

Although services form part of inventory under NZIAS 2 Inventories, they are not included as trading stock for income tax purposes under section __________.

Answer 15

YA 1

Question 16

Measurement of inventories under NZIAS 2

Cost should include all: [IAS 2.10]

• costs of purchase (including taxes, transport, and handling) net of trade discounts received
• _______________ (including fixed and variable manufacturing overheads) and
• other costs incurred in bringing the inventories to their present location and condition

https://www.iasplus.com/en/standards/ias/ias2

Answer 16

costs of conversion

Question 17

NZIAS __________
The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods.

Answer 17

2.12

Question 18

NZIAS 2.12
The costs of conversion of inventories include costs __________________________, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods.

Answer 18

costs directly related to the units of production

Question 19

NZIAS 2.12
The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a ________________ of fixed and variable production overheads that are incurred in converting materials into finished goods.

Answer 19

systematic allocation

Question 20

NZIAS 2.12
The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are _______ in converting materials into finished goods.

Answer 20

incurred

Question 21

NZIAS 2.12
The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in ___________________.

Answer 21

converting materials into finished goods

Question 22

NZIAS 2.12
The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are _______________________________.

Answer 22

incurred in converting materials into finished goods