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Inventories
Inventories
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1/15

Identify the items that would be included in the inventory of a furniture shop:

(i)Sofa sets for sale to customers

(ii)Shelves for display of ornaments for sale to customers

(iii)Tables and chairs for sale to customers

(iv)High stools for customers' use at the cashier's counter

(i), (ii) and (iii)

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(i) and (iii)

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(ii) and (iv)

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All of the above

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2/15

Jake is a trader of office equipment and he purchased a laser printer for resale. In this transaction, the laser printer bought is considered a ______________.

non-current asset

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current liability

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current asset

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non-current asset as well as a current asset

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3/15

Which of the following is not a cost of purchase?

Delivery cost from the warehouse to the retail store

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Salary of the salesman who sold the goods

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Cost of repackaging the goods for sale

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Import duties for goods purchased overseas

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4/15

A batch of goods that cost $3,000 has its packaging damaged during delivery. It was sold for $2,700. What is the effect on profit for the period?

Decreased by $300

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Increased by $2,700

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Increased by $300

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No effect

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5/15

The cost of inventory for ABC Trading was $6,000. Due to exposure to the elements, the net realizable value for the inventory was $4,200. The book-keeper omitted to record the impairment loss on inventory. As a result ABC Trading’s profit for the period is

understated by $1,800.

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overstated by $4,200.

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no effect

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overstated by $1,800.

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6/15



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7/15



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8/15



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9/15



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10/15



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11/15

Inventory is valued at market value.
True 
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False
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12/15

When inventory’s net realizable value is below its cost, the business has to record the inventory at the net realizable value. This recording will violate the historical cost theory.
True
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False
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13/15

The total cost of inventory is only its purchase price.
True
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False
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14/15

A business that trades in machinery has purchased inventory where training on how to operate the machinery is compulsory, and the business is charged the cost of the training. The training cost has to be included in the purchase cost of the inventory.
True
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False
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15/15


True
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