Editedquiz_chapter-7_inventories
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Chapter 7 Inventories
QUIZ 1. For government entities, inventories are assets (choose the incorrect one) a. Held for sale, consumption, distribution, or exchange. b. In the process of production for sale, consumption, distribution or exchange. c. In the form of materials or supplies to be consumed in the production process or in the rendering of services. d. Used in the production of goods. D – PPE, e.g., factory equipment used in the production of goods. 2. Entity A, a government entity, purchases office supplies. Entity A would most likely record the purchase a. by debiting the Purchases account b. as Inventory Held for Consumption c. as Inventory Held for Distribution d. by debiting the Office Supplies Expense account 3. Who owns the goods in transit under FOB shipping point? a. buyer b. seller c. either a or b d. none 4. Which of the following documents is prepared when issuing semi-expendable property to endusers? a. Requisition and Issue Slip (RIS) b. Inventory Custodian Slip c. Supplies Ledger Card (SLC) d. Waste Materials Report 5. The carrying amount of inventory is not recognized as expense in this type of event or transaction. a. The inventory is sold. b. The inventory is used in the production of another asset. c. The inventory is consumed by end users in providing service. d. The inventory is written-off.
6. Which of the following is subsequently measured at the lower of cost and current replacement cost? a. Inventories held for sale b. Inventories held for distribution c. Inventories that are undergoing manufacturing process for completion as finished goods for sale. d. None of these. 7. The supply or property office of a government entity uses this to record and monitor the movements and balances of inventories. a. Stock Card b. Inventory Listing c. Stock Ledger Card d. Registry of Inventory 8. The following information is available from Entity A’s (a government entity) accounting records: Purchases ............................................ ₱530,000 Purchase discounts ................................... 10,000 Beginning 160,000 inventory .................................. Ending inventory ..................................... 215,000 Freight-out .......................................... 40,000 Entity A’s cost of sales is a. 465,000 b. 475,000 c. 505,000 d. 585,000 A Solution: beg. Purchase s
Inventory 160,000 10,000 465,00 530,000 0 215,000
Purchase Disc. COGS (squeeze) end.
9. Entity A, a government entity and a manufacturer of military equipment, had inventories at the beginning and end of its current year as follows: Beginnin End g Raw materials 11,000 15,000 Work in 20,000 24,000 process Finished goods 12,500 9,000
During the year, the following costs and expenses were incurred: Raw materials purchased Direct labor cost Indirect factory labor Taxes and depreciation on factory building Taxes and depreciation on sales room and office Sales salaries Office salaries Utilities (60% applicable to factory, 20% to sales room, and 20% to office)
150,000 60,000 30,000 10,000 7,500 20,000 12,000 25,000
Entity A's cost of sales for the year is a. 257,000 b. 260,500 c. 261,000 d. 269,500 B Solution: beg. Purchases
Raw materials 11,000 150,000
146,000 15,000
beg. Direct materials Direct labor Factory overhead: Indirect factory labor Taxes and depn. - factory bldg. Utilities (60% x 25,000)
beg. COGM
DM end. WIP 20,000 146,000 60,000 30,000 10,000 15,000
257,000
COGM
24,000
end.
Finished goods 12,500 257,000
260,500 9,000
COGS end.
10. Entity A, a government entity, is a wholesaler of Product A, a non-unique good. The activity for Product A during July is shown below: Balance/ Date Transaction Units Cost July Inventory 2,000 ₱36.00 1
7 12 21 22 29
Purchase Sales Purchase Sales Purchase
3,000 3,600 5,000 3,800 1,600
37.00 37.88 38.11
How much is the ending inventory on July 31? a. 153,400 b. 156,912 c. 158,736 d. Answer cannot be determined due to insufficient information C Solution: Date Transaction 1Inventory Jul 7 Purchase
Units
Cost
Total cost
2,000
36.00
72,000
3,000
37.00
111,000
Total
5,000
12
Sales
(3,600)
21
Purchase
5,000
36.60 37.88
Total
6,400
37.60
22
Sales
(3,800)
29
Purchase Ending inventory
1,600 4,200
36.60
37.60 38.11
183,000 (131,760) 189,400 240,640 (142,880) 60,976 158,736
“So do not fear, for I am with you; do not be dismayed, for I am your God. I will strengthen you and help you; I will uphold you with my righteous right hand.” (Isaiah 41:10)
- END -
QUIZ 1. For government entities, inventories are assets (choose the incorrect one) a. Held for sale, consumption, distribution, or exchange. b. In the process of production for sale, consumption, distribution or exchange. c. In the form of materials or supplies to be consumed in the production process or in the rendering of services. d. Used in the production of goods. D – PPE, e.g., factory equipment used in the production of goods. 2. Entity A, a government entity, purchases office supplies. Entity A would most likely record the purchase a. by debiting the Purchases account b. as Inventory Held for Consumption c. as Inventory Held for Distribution d. by debiting the Office Supplies Expense account 3. Who owns the goods in transit under FOB shipping point? a. buyer b. seller c. either a or b d. none 4. Which of the following documents is prepared when issuing semi-expendable property to endusers? a. Requisition and Issue Slip (RIS) b. Inventory Custodian Slip c. Supplies Ledger Card (SLC) d. Waste Materials Report 5. The carrying amount of inventory is not recognized as expense in this type of event or transaction. a. The inventory is sold. b. The inventory is used in the production of another asset. c. The inventory is consumed by end users in providing service. d. The inventory is written-off.
6. Which of the following is subsequently measured at the lower of cost and current replacement cost? a. Inventories held for sale b. Inventories held for distribution c. Inventories that are undergoing manufacturing process for completion as finished goods for sale. d. None of these. 7. The supply or property office of a government entity uses this to record and monitor the movements and balances of inventories. a. Stock Card b. Inventory Listing c. Stock Ledger Card d. Registry of Inventory 8. The following information is available from Entity A’s (a government entity) accounting records: Purchases ............................................ ₱530,000 Purchase discounts ................................... 10,000 Beginning 160,000 inventory .................................. Ending inventory ..................................... 215,000 Freight-out .......................................... 40,000 Entity A’s cost of sales is a. 465,000 b. 475,000 c. 505,000 d. 585,000 A Solution: beg. Purchase s
Inventory 160,000 10,000 465,00 530,000 0 215,000
Purchase Disc. COGS (squeeze) end.
9. Entity A, a government entity and a manufacturer of military equipment, had inventories at the beginning and end of its current year as follows: Beginnin End g Raw materials 11,000 15,000 Work in 20,000 24,000 process Finished goods 12,500 9,000
During the year, the following costs and expenses were incurred: Raw materials purchased Direct labor cost Indirect factory labor Taxes and depreciation on factory building Taxes and depreciation on sales room and office Sales salaries Office salaries Utilities (60% applicable to factory, 20% to sales room, and 20% to office)
150,000 60,000 30,000 10,000 7,500 20,000 12,000 25,000
Entity A's cost of sales for the year is a. 257,000 b. 260,500 c. 261,000 d. 269,500 B Solution: beg. Purchases
Raw materials 11,000 150,000
146,000 15,000
beg. Direct materials Direct labor Factory overhead: Indirect factory labor Taxes and depn. - factory bldg. Utilities (60% x 25,000)
beg. COGM
DM end. WIP 20,000 146,000 60,000 30,000 10,000 15,000
257,000
COGM
24,000
end.
Finished goods 12,500 257,000
260,500 9,000
COGS end.
10. Entity A, a government entity, is a wholesaler of Product A, a non-unique good. The activity for Product A during July is shown below: Balance/ Date Transaction Units Cost July Inventory 2,000 ₱36.00 1
7 12 21 22 29
Purchase Sales Purchase Sales Purchase
3,000 3,600 5,000 3,800 1,600
37.00 37.88 38.11
How much is the ending inventory on July 31? a. 153,400 b. 156,912 c. 158,736 d. Answer cannot be determined due to insufficient information C Solution: Date Transaction 1Inventory Jul 7 Purchase
Units
Cost
Total cost
2,000
36.00
72,000
3,000
37.00
111,000
Total
5,000
12
Sales
(3,600)
21
Purchase
5,000
36.60 37.88
Total
6,400
37.60
22
Sales
(3,800)
29
Purchase Ending inventory
1,600 4,200
36.60
37.60 38.11
183,000 (131,760) 189,400 240,640 (142,880) 60,976 158,736
“So do not fear, for I am with you; do not be dismayed, for I am your God. I will strengthen you and help you; I will uphold you with my righteous right hand.” (Isaiah 41:10)
- END -
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