Midterm Exam: Accounting for Inventories
Quiz by Mark Anthony Grabillo
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50 questions
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- Q1The cost of inventory is the sum of...Cost of purchase, cost of conversion and other cost incurred in bringing the inventory to the present location and conditionDirect cost, indirect cost, and other costCost of purchase and cost of conversionCost of conversion and other cost incurred in bringing the inventory to the present location and condition30s
- Q2Inventories include all of the following assets, except...Held for use in the production or supply of goods or servicesIn the process of production for saleHeld for sale in the ordinary course of the businessIn the form of materials or supplies to be consumed in the production process or in the rendering of services30s
- Q3How should the unallocated fixed overhead be treated?Recognize as an expense in the period incurredAllocate to the finished goods and cost of goods soldAllocated to goods in process, finished goods and cost of goods soldAllocate to raw materials, goods in process and finished goods30s
- Q4Mildred Company is a wholesaler of office supplies. The FIFO perpetual inventory is used. The entity reported the following activity for inventory of calculators during the month of August: (see image attached) What is the ending inventory on August 31?P1,522,880P1,529,600P1,501,600P1,500,800300s
- Q5The allocation of fixed factory overhead to the cost of conversion is based on...Normal capacity of the production facilitiesEither the normal capacity or actual use of the production facilities, whichever is appropriateRelative sales value methodActual use of the production facilities30s
- Q6The cost of purchase of inventory does not include...Freight, handling and other costs directly attributable to the acquisition of goodsImport duties and irrevocable taxesPurchase priceTrade discounts, rebates, and other similar items30s
- Q7The inventory of a "service provider" is described as work in progress and includes which of the following?Attributable overhead incurred in providing the serviceAll of the aboveLabor and other cost of personnel directly engaged in providing the serviceCompensation of supervisor directly engaged in providing the service30s
- Q8Which of the following costs of conversion cannot be included in the cost of inventory?Factory overhead based on normal capacityCost of direct laborFactory rent and utilitiesSalaries of sales staff30s
- Q9Consumable stores or supplies to be consumed in the production process are reported as...Property, plant and equipmentInventoryInvestment propertyPrepayments30s
- Q10Which of the following should not be reported as inventory?Shares and bonds held for resale by a brokerage firmPartially completed goods held by a manufacturing entityMachinery acquired by manufacturing entity for use in the production processLand acquired for resale by real estate firm30s
- Q11Costs incurred in bringing the inventory to the present location and condition include...Storage cost not necessary in the production process before a further production stageCost of designing product for specific customersDistribution costAbnormal amounts of wasted material30s
- Q12Which of the following should be taken into account when determining the cost of inventory?Storage cost of part-finished goodsAbnormal freight-inInterest on inventory loanRecoverable purchase tax30s
- Q13Inventories encompass all of the following, except...Finished goods producedMaterials and supplies awaiting use in the production processMerchandise purchased by a retailerLand and other properties not held for sale30s
- Q14Theoretically, cash discounts permitted on purchased raw materials should be...Deducted from inventory, whether taken or notAdded to other income, whether taken or notDeducted from inventory, only if takenAdded to other income, only if taken30s
- Q15A consignee paid the freight cost for goods shipped from a consignor. The freight cost is to be deducted from the consignee's payment to the consignor when the consigned goods are sold. Until the consignee sells the goods, the freight cost should be included in the consignee's...Accounts receivableDistribution costFreight outCost of goods sold30s
