PSAK 14

What is the primary issue in accounting for inventories?

A determination of what costs comprise in the cost of inventories
amount of cost to be recognised as an asset and carried forward until the related revenues
B
are recognised
C choosing the correct formula for cost. i.e., FIFO or Weighted average
IAS 2 applies to all inventories, except:
A work in progress arising under construction contracts
B financial instruments
biological assets related to agricultural activity and agricultural produce at the point of
C
harvest
D All three above
E None of the above
Inventories are assets which are :
A held for sale in the ordinary course of business
held with the intention of being used for the purpose of producing or providing goods or
B
services
C in the process of production for such sale
in the form of materials or supplies to be consumed in the production process or in the
D
rendering of services.
Net Realisable Value & Fair Value. Select which is incorrect:
Net realisable value is the estimated selling price in the ordinary course of business less
A
the estimated costs of completion and the estimated costs necessary to make the sale.
Fair value is the price that would be received to sell an asset or paid to transfer a liability
B
in an orderly transaction between market participants at the measurement date.
C Net Realisable value is an entity specific value
D Fair value is an entity specific value
Inventories shall be measured at:
A
lower of cost and net realisable value.
B
lower of cost and market value (LCM)
C
historical cost
D
replacement value
The cost of inventories shall include costs incurred in bringing the inventories to their present
location and condition. True or False
A
False
B
True
Cost of Purchase includes:
A Purchase price
B Trade discounts, rebates
C transport, handling and other costs directly attributable
D import duties and other taxes (excluding recovered from tax authorities)
E import duties and other taxes (including recovered from tax authorities)
1

Allocation of fixed production overheads to the costs of conversion is based on?

A
ACTUAL Capacity
B
NORMAL Capacity
C
ACTUAL level of production
Which is FALSE?
In times of abnormally high production, the amount of fixed overhead allocated to each
A
unit of production will decrease
In times of abnormally high production, the amount of fixed overhead allocated to each
B
unit of production will increase
C In times of low production, unallocated overheads are recognised as an expense
WHICH is measured at net realisable value and deducted from the cost of the main product?
A
Joint Products
B
By-Products
Costs excluded from the cost of inventories are: [select all that is applicable]
A Abnormal cost (material/labour/overhead)
B Storage cost
C Administrative overheads (indirect)
D Borrowing cost
E
Selling cost
Which techniques for the measurement of the cost of inventories may be used if the results
approximate cost?
A
Standard Cost method
B
Variable Cost method
C
Marginal Cost method
D
Retail method
The cost of inventories shall be assigned by using: [select all applicable]
first-in,
Afirst-out
(FIFO)
last-in,
Bfirst-out
(LIFO)
weighte
Cd
average

When is the different cost formula within inventories justified?

A inventories with a similar nature or use
B
inventories with a different nature or use
C
inventories in another operating segment.
D inventories in different tax juristiction

Under which method is the items remaining in inventory at the end of the period are those
most recently purchased or produced?
A
Weighted average
B
First in First out
C
Last in First out
Which of the below is FALSE with regard to writing down the inventory to net realisable
value:
A when inventory is damaged
B when inventory is obsolete (partly or fully)
C when the sale price fluctuates
Which of the below is TRUE with regard to writing down the inventory to net realisable
value: [select applicable]
A written down for group items by classification
B written down for group items by use
C written down not by grouping, but line by line
D written down line by line
Does Estimates of net realisable value takes into consideration provisions?
A
No
B
Yes
The amount of any reversal of any write-down of inventories, arising from an increase in net
realisable value, shall be recognised as a:
A reduction in the amount of inventories recognized as an expense
B separate line item in other income as reversal of write-down
C adjustment against any write-down of inventories during the year of reversal

Under disclosure, can an entity not disclose cost of inventories recognized as an expense?
A
No
B