ACCOUNTING- PAS 2

21問 • 2年前

問題一覧

It contains the requirements on how to account for most types of inventory.

PAS 2- INVENTORIES

The standard requires inventories to be measured at the ______________________________and outlines acceptable methods of determining cost, including specific identification (in some cases), first-in first-out (FIFO) and weighted average cost.

lower cost and net realizable value (NRV)

What is the objective of PAS 2?

To prescribe the accounting treatment for inventories. It provides guidance for determining the cost of inventories and for subsequently recognizing an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.

It include assets held for sale in the ordinary course of business (finished goods), assets in the production process for sale in the ordinary course of business (work in process), and materials and supplies that are consumed in production (raw materials).

INVENTORIES

Accounting for Inventories is done under either through ________.

PERPETUAL INVENTORY SYSTEM AND PERIODIC INVENTORY SYSTEM

Under this system, the inventory account is updated for each purchase and sale of inventory. Records called “stock card” that show the perpetual balances (continuous or running balances) of inventory and cost of goods sold are maintained under this system.

PERPETUAL INVENTORY SYSTEM

Under this system, the “Inventory”account is updated only when a physical count is performed. Thus, the amounts of inventory and cost of goods sold are determined only periodically.

PERIODIC INVENTORY SYSTEM

Purchase inventory on account (Perpetual inventroy system)

DEBIT INVENTORY, CREDIT ACCOUNTS PAYABLE

Purchase inventory on account (Periodic Inventory System)

DEBIT PURCHASES, CREDIT ACCOUNTS PAYABLE

Sale on Inventory on Account (Perpetual Inventory System)

DEBIT ACCOUNTS RECEIVABLE, CREDIT SALES & DEBIT COST OF GOODS SOLD, CREDIT INVENTORY

Sales of inventory on account (Periodic Inventory System)

DEBIT ACCOUNTS RECEIVABLE, CREDIT SALES

Physical count of inventory at the end of the period. (Perpetual Inventory System)

NO ADJUSTING ENTRY REQUIRED

Physical count of inventory at end of period (Periodic Inventory System)

Income Summary Inventory-Beg. Income Summary Purchases Inventory-End Income Summary

Inventories are initially measured at ______.

COST

In subsequent measurement, inventories are required to be stated at the ________.

LOWER COST AND NET REALIZABLE VALUE (NRV)

What are the cost formulas?

SPECIFIC IDENTIFICATION, FIRST-IN, FIRST-OUT (FIFO) AND WEIGHTED AVERAGE COST FORMULA

The formula which had been allowed prior to the 2003 revision of PAS 2, that is no longer allowed.

LIFO FORMULA

It shall be used for items that are not ordinarily interchangeable or for items that are individually unique and goods or services produced and segregated for specific projects.

SPECIFIC IDENTIFICATION

It is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale

NET REALIZABLE VALUE (NRV)

If the cost of an inventory exceeds its NRV, the inventory is _______ to NRV, the lower amount.

WRITTEN-DOWN

If the cost of an inventory is lower than its NRV,_______ is necessary.

NO WRITE-DOWN

VITMOLOGY-PPT2

Anndrea S. Galupo · 22問 · 1年前

VITMOLOGY-PPT2