INTERMEDIATE ACCOUNTING

PRELECTURE QUIZ: INVENTORIES AND BIOLOGICAL ASSETS ODM

1. Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a
retailer?
a. Raw materials. b. Work-in-process. c. Finished goods. d. Supplies.

2. Where should goods in transit that were recently purchased f.o.b. destination be included on the balance sheet?
a. Inventory. b. Accounts payable. c. Equipment. d. Not on the balance sheet.

3. If a company uses the periodic inventory system, what is the impact on net income of including goods in transit
f.o.b. shipping point in purchases, but not ending inventory?
a. Overstate net income.
b. Understate net income.
c. No effect on net income.
d. Not sufficient information to determine effect on net income.

4. In a period of rising prices, the inventory method which tends to give the highest reported net income is
a. base stock. b. first-in, first-out. c. last-in, first-out. d. weighted-average.

5. Tanner Corporation's inventory cost on its balance sheet was lower using first-in, first-out than it would have
been using last-in, first-out. Assuming no beginning inventory, in what direction did the cost of purchases move
during the period?
a. Up b. Down c. Steady d. Cannot be determined

6. The acquisition cost of a certain raw material changes frequently. The book value of the inventory of this
material at year end will be the same if perpetual records are kept as it would be under a periodic inventory
method only if the book value is computed under the
a. weighted-average method. c. LIFO method.
b. moving average method. d. FIFO method.

7. Agricultural activity covers a diverse range of activities. Such diverse range of activities have common features
which includes all of the following except
a. Capability to change c. Recognition of change
b. Management of change d. Measurement of change

8. Which of the following is not dealt with by PAS 41: Agriculture?

a. The accounting for biological assets
b. The initial measurement of agricultural produce harvested from the entity’s biological assets
c. The processing of agricultural produce after harvesting
d. The accounting treatment of government grants received in respect of biological assets

9. It comprises the processes of growth, degeneration, production, and procreation that cause qualitative or
quantitative changes in a biological asset.
a. Genetic mutation b. Agricultural activity c. Biological activity d. Biological transformation

10. Where the fair value of the biological asset cannot be determined reliably, the biological asset is measured at
a. Cost
b. Cost less accumulated depreciation
c. Cost less accumulated depreciation and accumulated impairment losses
d. Net realizable value
A ship in a harbour is safe but is not what ships are built for
-anonymous
INTERMACC: PRELEC – INVENTORIES & BIO ASSETS Page 1 of 1