._Chil
-
JIii"'"
?ti
firl?
]82
CHOICE a financial
considered
is
M(JLT[PLE
not
PROBLEM'6-2:
follo,.;ng
Which of the
I.
·
a.
debt securities
v
Investmentin
receivable
_.Accounts
b.
c.
?-d.
Prepaidassets
of
A cash shortage
2.
3.
a
debit to
a
debit
c.
credit
to
d.
credit
to a
to
to
entry
or
cash shortage
b.
The
'
a
miscellaneous
cash shortage
record the
or
overage
of a petty
replenishment
preparation,
brought
to
statement
of
a.
b.
an
This
GAM for
requires
requires
c.
requires·the
d.
does
the approval
the approval
establishment
of
a
petty
of the Head of
Agency.
of the Chief Accountant.
approval of the President of the
Philippines.
require any formal approval because
cash
not
funds
the
N_GAs,
likely to
are
petty
be immaterial.
XXX
9.
XXX
XXX
of
bank
that
bank
is
"Loans
the books
Receivable"
of accounts
statement
balances
reported
Y."Adjusted Balance
is most
account
of which
a.
COA
b.
NIA
of the
on
10. Which
.,.a-:-
d. All of these
of the
followingis
It
b.
underlying.
d. All of these
-
not
one
of the characteristics
of
requires no notional amount
(or only-a very minimal
amount).
Its value
changes in response
to the
change in an
notional
Method
in
derivative?
are
the
likelyJ0 be used
following government
yBTr
XXX
reconciliation
and
The
agencies?
XXX
fin?cial position.
Method
to the
b.
System
XXX
unadjusted book
adjusted balance
Bank to Book Method
Book to Bank
According
;a
XXX
method
the
8_
cash fun d
of a
Cash-Treasury/Agency
Deposit,Regular
this
on
equal,
difference is either
shortage or overage.
of
handlingpetty cash fund is called
system
Impress System
a.
c. Pretty Cash
System
b. Fluctuating Balance System
xxx
Expense accounts
Under
a
petty cash fund. At
any given point of
hand and the
cash vouchers
petty
be
must
the ledger balance
of the
cash fund. If these are
petty
the
cash
cash fund
Cash-CollectingOfficers
5.
the
)Y.lmprest?ystem
d. Losses
(MDS), Regular
Expense accounts
Petty Cash
Expense accounts
d.
Entity A maintains
·
I
recordedby a government entity as
c. Accounts
receivable
Disbursement
of these.
None
not
account
cash
,12,000.
Pantry supplies Worth '15,000.
Office supplies worth
,20,000.
equal to
is
Cash-Modified
C.
7
account
Expense accounts
b.
td.eii
overage account
income
governm?t entity
Y
reco
receivableaccolll'lt
Dishonored checks are
Notes receivable
a.
receivables
Other
,,,b:'
4.
most lik
I ely
is
183
worth
Rent
tiIJle,
a
as
/.
entity
government
--------
of
fl:\ W}tlch the following
may be
CJ fund of a government entity? paid throughthe petty
ass et?
fund
Petty cash
a.
ial Assets
a
"''"·
-----:-------._
,..
''\i'
;,,;riiJ
settled at
It is
d.
future
a
a
v
iflvest:IJlent).
require< no
net
miniJnal initial
It
c,
;,,vestment (or only
net
'"""'
.
.
ftfl
184
pt1C1II
185
1,456,792
1,330,873
'
b-
date-
interest
...-1.e
Jll
?
,.
6-3:
CHOICE
these
MlfL TifLE
PROBLEM_the
to
According
1.
that
?
of
,1:?1
?
to
Costs
a
Y.
are
for NGAs,
G AM
&recdY attfl
finaild al
a
,n?u
b.
c.
Transaction costs
categories
of
b.
finanC'lqJ
NGAs?
Held-to-maturityinves11J1et1t5
Loans and receivables
finaildal assets
Available-for-sale
other comprehensiveincome
Fmancial asset through
Entity _Aacquires an
amount to ,10,000.
rosts
year-end,the
defidt, how much is
through surplus or
/
B.
has
a
d. 0
90,000
January 1, 20x1,
four questions
Entity A acquires 10-year, 10%, P2,000,000 fae?
bonds
maturity
investments.
Transaction
P125,919. The issuer
The effective interest
classifies
and
for ,1,456,792
amount
to
pays annual
rate is 14%.
costs
on
interest
the
them
The initial
20x1 is
186,322
GAM for NGAs,
changes in fair value of
as available
for sale financial assets
are
in surplus or deficit
a
assets
orb
as
acquisition
every
carrying amount
of the investment
acquires
investment
is PS0,000.
held-to
have
been
amount
of financial
b.
d.
EntityA recognizes
in fair value.
classified
The investment
under
which
Financial
and
asset
receivables
or
incurs
of the
P30,000 loss from
would
most
likely to
following categories
financial assets
through surplus
Held-to-maturity investments
Loans
of the
a
assets?
Available-for-sale
31.
January 1,
an
investment for Pl00,000 and
of Pl0,000. At
year-end, the fair value
costs
change
December
on
A
transaction
the
c.
4.
financial
the
c.
Entity
9.
Use the fallowing infimnaiion
for the next
On
sale
cl ass ifi e d
d.
?
.
JS
195,7()9
classified as availa:b]e for
the interest income in 20xl?
c.
recognized
recognized in net
not recognized
a.
finanC!aJ
the loss from
the
as
much
fair value?
d. 200,000
to
investments
:;
is
203,951
According
1
financi?
is
221,580
a.
for sale
?1,800,000, how
c.110,000
/100,000
b.
changein
is
d. 238,869
much
asset, how
in tau value,
?
available
as
year-end
C.
investment
If the
'
Transacti
investment
is classified
investment
of P900,000. H the
value
asset
At
for Pl,000,000.
at
.
"'
3.
(200,000)
(217,289)
a.
investment
186,322
c.
d. 200,000
asset and the fair value
the gain (loss) from the
ial costs
F.u,ana
of the
I
is cl?ified
investm?nt
If the
6-
d. Variable costs
sell
is not one
a
Ot
'
Which of the following
GAM for
assets under the
2
lSstJ.e
.
·
.......
c.
.
.
'
,
..-,ment
.
2,000,000
?
203,951
y.
to
increll'l
eri?
acquisition
the
·butable to
1,582,711
"'"1 580
,&J.
a.
refer
income in 20x]
c.
d.
deficit
??t,
186
'-.:
for ,100,ooo a
Investment
nq
an
the fair
year-end,
Va)
10. Entity A acquires
At
"•
of ,10,QOOthe
inv
transaction costs
However,
•
is
mvestment
·
,i20,00o·
statement
year-end
fill?
187
;.
•oa.
or'?•
Preparing
b.
?
0'htie?1
.
maintame
of
fina,, I
reparted
,106,382. The
of
appropriately
?,1
amount
•nve.,liii
a carrying
at
under
classified
position
been
Whicl,Of "11
to have
would most likely
assets?
Ii; '
of financial
categories
following
financialassets
in the
cial Assets
Making
c.
Loans and
d.
Cannot be
receivables
d.
due
determined
6-4: FOR
According
1.
to the
2.
QISCUSSION
CLASSROOM
GAM for NGAs,
cash
b.
cash in bank
on
d. cash
following
Which
of the
that
r?ported in the
is
is
b.
treasury
excluded from the
f finan
.
statement
government entity?
a.
cas0
The per transaction
a
govemmen
a.
PS,000
b.
,10,000
unreleased checks drawn
cancelled checks drawn
c.
o
ac
amount
.
era
I
6.
counts
An
unexplained cash
recorded
as
a.
credit to
b.
debit to
?
d.
Caso
position
of
b.
7.
received
government
a
entity is
shortage or overage
to
miscellaneous
credit
to
a
cash
income
account
8.
bank
followingare
account
,K"AdjustedBalance
d. Any of these
adjusted balance
balance
per books and there
the difference is most
a.
Credit
b.
Debit
of cash is less than
memo
memo
According to
considered
of
cash custodian
bond
internal
of
accountability
shall
to be
not
the custodian.
be
are
controls
over
cash
c.
properly
less
bonded.
than
the
The
cash
Fair value
no
minus
transaction
Fair value
are
measured
Subsequent
costs
costs
Amortized
cost
Amortized
cost
Amortized
cost
Fair value
are
unadjusted
other
the GAM for NGAs, receivables
plus transaction
the
for
Method
reconcilingitems
likelycaused by
c. Depositsin transit
? Outstandingchecks
Fair value
a.
d.
Requiring a
amount
reconciliations
Initial
except
a.
I
If the
account
shortageor overage
the limit.
agency shall prepare a bank
reconciliation
account
maintained. Bank
Bank to Book Method
Book to Bank Method
a.
a
undeposited collections
of
overage
credit
All of the
before
petty cash disbursements of
,,9'15,000
d. No limit;
sky is
Fair value
4.
·
payableaccount
cash
a
canvasses
government
each
a
a
thresholdfor
tity ts
preparedusing the
of
faPost-dated checks
A
errors,
3.
t en
y.-rashequivalents
hand
a.
government entity's
a
following except
of the
comprises all
time.
or
.
5,
PROBLEM
Requiring at least three
bidders
making pure h eses.
insufficient inf ormat·
ton
to
of
cash on hand and
cash vouchers
may or may
petty
not be
of petty cash fund at
equal to a fixed amount
any given point of
e.
'
account
establishingan •mount for recurring expenses before
a
petty cash fund.
Maintainingthe
petty cash fund
Balance System
whereinthe total under a Fluctuating
Available-for-sale
c.
bank
government
entity.
estimates
.
a.
rnvestments
Y. Held-to-m?turity
bank_
'OConciliation
for each
•
db Ya
or
at
?
/Rlr value of
In the
9.
The
is
,?•1,ges
sut,sequent
(or sal•
cl•ssifieJ RS 0vail•ble
or deficit
surplus
10.
b.
net assets or
c.
not
d.
any of these
lnve
recognizedIn
ore
/iitK'lltOr/Cw
I
"litieiit
\1 I
IRY
Chapter7
Inventories
equity
recognizedaccoUJ1ting
Policychoice
as an
CAM
According to' the
derivatives
-
an
?'til
,
is
management
!).- <risk
b. speculation
for
NGAs, the
ver
y
PUrpo?
rnine 06jectives
£«•Account
for inventories
by•
Of
J.
risk incurrence
d. a orb
2-
c.
Describe the procedures in governmen1enHty.
the
receipt and disposition of
inventories by a ?ove!'lment
entity.
ntrod·uction
1
Jr,ventories
are
assets:
for
sale
·
a.
b.
Held
d1stnbuttonin
.
.
.
operations(Finishedgoods);
of production
In the process
for
or
process);
c,
or
In the
of materials
productionprocess
or
or
a.
or
supplies
distributed in
(Raw materials and supplies).
consists of the
sale
ordinary course
distribution (Work
to be consumed
the
specifically,the inventories
following:
of
a
government
Inventory Held for Sale (e.g.,medicines for sale
Inventory Held for Distribution (e.g., rice
goods held
c.
d.
e.
in
for
Inventory Held
in the
rendering of services
pharmacies)
b.
of
r
form
More
the
distribution)
for Manufacturing
(e.g., raw
and
in
entity
government
other
welfare
materials, work-
in-process)
Inventory Held for Consumption (e.g., office supplies
inventory)
of
consists
Semi-Expendable Property
machinery,
equipment, furniture and fixtures and similar items that are
not
capitalized as PPE because their costs are below the
?15,000 capitalization threshold for PPE.
-
hoh1,....
?,) I
?
·
190
\11
r ..
,,,1or/l!S
191
-
-
,t
"'"'"red
cost and
sub",
%(!
I
?1,}
10111,uy
forrnulas
f goodssold
otlt
cos t
and cost o(
0thc
folJowlng
i.181n8
CORI
,
1nvcnto1'lcson hand
formulnR:
determined
.
arc
ipe11tlflcatlo11
eciftc
t'hls shall be
Spot
ordinarily Interchangeable uRcd
(I.e.,
-
.>,
,,
r;cg
'
a.
b.
following:
rebates,
trade discounts,
cxc/11d/11g
comprisesthe
osr
ond
•11,1
price,
in purcl>•SC the asset to its
1
similar deductions
In bringing
"1•11Q?
incurred
costs, conversion
Direct costs
freight
co,?,
(e.g.,
and condlHon
Purchase cost,
location
such as
of labor
costs
productionovcrhc
and
•d
101
manuf,ctureditems).
Cost cxcl11dcsthe following:
materials, labor, and
of wasted
amounts
Abnormal
1.1.
produc,lion
c.
.
donations)
b.
received from
Inventories
transnctions
non-exchon??
(e.g.,
acquisiuon-datcfair vn/11e.
measured
at fair value
initially
less
initiallymeasured
are
items, their initial measurements
their costs for purposes of subsequent measurement
Net
or
NRV/Current
Realizable
estimated
at
deemed
the lowerof
cost.
replacement
Value
costs of
are
(NRV) is estimated
completionand estimated
selling price less
selling/disposalcosts.
on
spectf
hand.
-
is
formula,a new wrightcd
computed ofter every purchosc. The ovcrogli
computed
used
ore
on
in
hand.
dclcrminlng
the
cost
of
goods
Accordingly,
cost
replacement cost is the
stated
acquire the
asset
on
the
reportingdate.
the
entity
wou
Id incur lo
cost
ovcrug
sold and
al
ovcrnge" cost formLJla.
ovcrnmcnt
Under
entities
Lhis
shall
system,
use
purchoscs,
1rans?clionsaffectinginventoryarc
and "cost of sales"
accounts,
th(! per1Jeh,n/
recorded
soles,
in the
Inventory
and
olht•r
"invl'ntory"
appropriate. Morcovcr, stock cards
and stock ledgers are maintained.
These enable the retrieval of
information
on
costs
and quantities of inventories sold
and on
hand at any given point of lime.
However, purchases of supplies
and materials
out of the
petty cash fund for Immediate use or on
emergency cases are chargeddirectlyas expense
The FIFO cost formula and the
periodic inventory system
are not used
by government entities.·
as
..
cost
unlt
of solcA nnd ,•.ndfti!J,
ovcrogc costs, rothcr than ot llw actunl
osts of the i1wcntorics sold
or on hond. Thls rnclhod
I.
ornmonly rdcrrcd lo in trodillonal
b111ilncs
occoL1nting
by
•ntitics as thl1 "moving
arc
I
Current
ore
are
Weightedaverage cost this shall be used for
large numbers
of Hems of Inventorythat arc
t>rdinArlly
Thi
lnlcrchon?coblc.
sholl be applied under a /JC'7Jl'/11n/
/11vr111ory
l!.'fHle,11,
Under this
system.
For these
cost
items
.
are
Agriculturalproduce
point of harvest.
projects.
Lhrnw that
::Jng
at
costs to sell at the
unique) and
this formulo,
11pccific costs are attributed
to
identified lh.Hnfl o( inventory.
sol
coRt
Acct)rdlngly,
of
resents the actual cost11 of
the Apcclflc Items sotd whll
Inventory represents the
actual costR of the
inventory
inventory
Sellingcosts; and
Administrative overheads
'xcl'ptions:
a.
Under
costs
overhead;
b.
t,.
rc,,otcd
,,,
for spec, 'fl c
for itcmR that
•
-
c:???,?l)
,1orie5
,,,11,'
---
,
192
recognizedas
"
Expense
inventory
or
of an
193
.
.
as an
Recognition
,mount
The carrying
it is
th?period
sold,
distributed,
or current
to ,ts
inventory
wnte-down of
also
as
is
appropriate,
lnventoru field
e
exchartged,consu?Peiis,,
:,,,,>·"'ocess-Inventory
·?- t'I
NRV
exp•""'·
,..:og,,1zed
as
replacen,•nt
,
,,.?
v•
.......
ect Labor
O?nufacturing
Overhead
M
t,
labor and
rials,direct
111ate
roduct,on
0ver/leaGoods
·she d
fil11
wor k
•
2K
F;nJshedGood, Inventory
To recogniu
cost
30()
fi11ished
goods
•
rocess
Inventory
2K
Process-Inventory
2K
ished goods
to ,
t{[i!!
costing '200 are fou?d to
have
replacementcost of ,1so.
Jflventories
,1 50 and
current
'
Held
for Sale
I
.
SO
SO
a
net
?ealizable
value
Loss-Inventories
Ilrnpairment
Welfare Goods
20
for
20
-
800
Inventory
·
.::ln:.:v?en;::..:t?o?ry'-H_el_d_.,_}_o_r
_D...:.:is:....:tr.:..:ibut·
---.!On
Inventory Held for Sale
Merchandise
of
Inventoru Held for Distribution
Distribution
Cost of sales
2K
of sales of
recognizetransferofcompleted
To
·ts
,,111
-
...
··-
manufacturing
.
d to
,,u
90()
recognizetra11sfer
ofraw
To
MnMufactu'
Cost of Sales
t,{atedals lnvento,y 800
Raw
.
for
2K
800
Welfare Goods Expense
Welfare Goods for
BOO
Receipt and Disposition
of
Inventories
Receipt.
lnuentoru
Held for
Manufacturin
1.
End
users
basis
Semi-Expendable
Machinery
EquipmentExpenses 800
Semi-Expendable
Machinery800
To recognizethe issuance ofsemi-
and
ndab/e machineru to end-users
the Purchase
prepare
purchase
in preparing
for the
Request (PR)
of items not available
on
form to request
stock. The PR is the
the Purchase Order.
'End users' refer to the
individuals who will actually be
using the items. For example, the end users of office
supplies
those who are working in the
are
office; the end users
for
cleaning materials are the janitors. As an internal
the
control, only
appropriate
end
users
are
allowed
to
make
purchase
requests for the items they need. It would be inappropriate for
office clerk to make a purchase
an
request for c?eaning
materials.
;/1!8
e11/II
,,,v
194
ares
JYS
·-
As
an
internal
control,
'I'\?
supplier when
erty/Supply Division) the SC (mainlaincd by th<'
arna?iri,1
proP
and SLC
The
quantities nd
q
(maintained by th
nting D' 1v1s1on ) arc
document,ssu st'-nec,·fications, PO
agre>?.1
Accot.1
PO is a
The
the
s
periodically
es
erves
t
chased,
reconciled.
111d ,ca
as
t?
purchase.It items being pur
supplier.
the
Property/SupplyDivision
the
and
prices of
least 3
prepares the Disbursement
th• enblJ'
7.
(D\I) 'then
supp/·1er8
fro 111 at
between
forwards
contract
\fO
canvass
;1,
and
ab
a
,1,000
.J
offf"'1p re
,uthl>dzed
.
.
2.
Purchase Order([>
OJ.
rhe
------------------
to
the
1:>
,
·
·
·
.
·
?
.
.
.
'f),:cher
.
.
.
Recall that
requ;redfor purchases
'h
3
.
'
.
.
will be
(JAR). The IAR
inspectingand
The
delivered
and PO
Division
to
with the
.
the DR
'
!AR.
conformance·
the
in both
the. PO
specifications
the
the result of
inspection(i.e.,
deliveries
Rejected
Property Inspector
both the
for
s.
of
the
DR
/nd
re?•no,>
rned
to
forwards the copies of D R, lAR
Property/
and
A ccountin
g
.the
Stock Card
The
Property/SupplyDivision, through
in the Stock Card (SC).
Keeper, records the accepteddeliveries
The SC shows
the
inventory, as well
quantities
as
receipts
the available balance
and
at any
9·
6.
The
AccountingDivision
10. The Accounting Division records the items issued
and updates the SLC.
of accounts
a.
the available
Waste
other documents
Materials
Supply
records the
as
following are
used
in the
inventories:
b.
receipts and issuances of inventory,as well
balance at any given
point of time.
.
Property/SupplyDivision prepares the
Report of Supplies
Issued (RSM!).The
and Materials
RSMIwill be used by the
Stock Card Keeper in updatingthe·sc and the
Accounting
Division in jou,rnalizing
the items issued.
given point
accepted deliveries in the
books of accounts and in the SuppliesLedgerCard (SLC). The
SLC shows both the quantities and
of all
monetary amounts
,
The
issuances of
of time.
n
Division.
recording.
of all
0
prepare the Requisition
E n d users
and Issue Slip (RIS) to
the issuance of
for
items avaiJable
req uest
on stock. The Head
the reques timg in ct·1v1id ual
0 f
shalt approve 'the R IS Th e
RIS is then
forwarded to the
ap
Property/Supply
11. The
5.
support;n?
proved
1,\1
acce
will be
Supply Division
with
for processing
·
Property Inspector.
rejection)hi the
the supplier.
The
.
?
iitems.
de I.ivere d
the
accepting
Division forwards
items
and indicates
..
D15posrtio
.
inspects
Property Inspector
The
,
Property/Supply
and PO to the
4.
paY
.
.
AccounHng
D;v;,;0n
,
Ppi?
of the
.
,
together
the
men t.
Delive ry
Rec
portion
"received"
the
and Acceptance I! 'ip1
Di1v1s1on signs
the Inspection
Property Inspectoepo,1
(DR) and prepares
used by the
r
ase
Wh en th e pure
to
doCU,nents,
PropertYISl.l
delivered,the
are
d items
11
ovc.
to
,mo unting
c.
Report
Custodian
destroyed
Report on
reporting
to
-
prepared by
report wasted
the
in the books
disposition of
Property
materials,
spare parts and other
the Physical Count
such
or
as
spoilages.
used
in
of Inventories
the results of physical counts.
the
It shows
balance of inventory,as well as any shortagesor overages.
used to
Report of Accountability
for Accountable Forms
-
-
report the
the
movement
possession
of
an
and status
officer.
of accountable
forms
in
---Sh?)
,.
Jtfl/et1tories
197
when
cuswdianSlip
d. i,-tory
prepared issuing
?
-
sLfMS
'''l1.
.
p?O
properfY·
expendable
TRUE OR
BLEM7-1:
fll?aordingGAMFALSE
for NGAs,
inventories
to the
I
11,
·
The
inventories of
ntities
?
enattes
governrnent
lfeld
Inventory
Held for Sale,
held for
indud
u
in
for
?
the
foUo
subsequently
meaSUred at
are,
replacement
ent
Chapter 7 summarv:
•
e
?sclassified
as
..
Distributio/">i
I
I
Inventory
djslnbuhon),
supplies),and
below the
and
thresholdfor PPE).
,1s,OOOcapitalization
at the
meas?ed
subsequentl?.
sub
I
.
Ii za ti on
/
of
and
t
•
for
machinery,
items
are
,,...,.-
iJlVentones.
below
the
ded
recor
as
II
LoUler
Of
Goods held for sale are
sequ enuy
heldfor d1stn'but1onare
while
goods
NRV
Cost and
Cost and Current replacement
measured at the Lower of
and the Periodic inventory ystern ate
The FIFO cost formula
sed bv government entities.
notu
f'
itett\s
scost.
•
on
held for distribution.
or
to
·
•
depending
cost
held for sale
tor
government
realizable value Of
whether the inventory
lieid(•.g,
GAM
According th_e
f?rNGAs, purchases
l0rl
tz·
funuture
goods
Consumption (e.
equ ipment,
fixtures
!feld
similar
016?
Manufacturing, 1nvento,Y
lo 000 capita
hr eshold
Property (PPE-lik!'
PPE
Seini-Expen<lable
Inventory
welfare
of
net
Relief goods, office supplies,
equipment
13.fiXture
items
are
inventories by
-
-
f
4·
FIFO
.r5·
for
The GAM
cost
flow
GAM
NGAs
I'
The Purchase
allo?government
entities
PIOO and
L.
Request (PR) form
beginning balance
inventorymust
entities
is not
the
is
of items of
as
the
use
to
available
of
of
cost
be Pl20.
preparedwhen
inventorythat
inventoryis PSO, the
goods
sold
is
__..
,..,....
T
t·
to
use
for
entities, accordingto the GAM for
NGAs.
request for the issuance
on stock.
are
and
recorded
formula.
specific identification
If the
furniture
for
by government
t8·
and
may appropriately be
a.government entity.
NGAs allows
government
periodicinventory system.
The
?6. The
t7.
that
.,,
{
j
1
«l
end
use
users
available
are
net
a
purchases
P30, the
ending
r
Ch.ip? ?
eggs.
entity, ,ells '{ one
Fact pal/em
d
govenunenteonsJSte O
Entity A, a
the
At
??
)
.
198
Start
01
(I) red
tlie [)
egg
A
invento,Y
?,,,
Entity
A's
acq "Ire,/ ,
pedod, Entity of "2 During the period,
P4. EntityJ\
for
egg
aJ110unt
1?
Aceordingto th?GJ\M for NGJ\s,
this
uJJlbers of items of
fl
?ory
illter changeable.
4,
.
,
...
.
·
carr'Vlng
·,-·
)'3 and
egg (or
th•
egg during
(1) brown
brown
one
period·
10.
sale
eggs
"
are
cost formula
E ntity
,
J\',
cost
system
occurred Only
the sale
Any of
e.
cos,
alter all ?
the
This refers
c)·
purchases
·
b.
CHOICE
PROBLEM 7-2: MULTIPLE
mvento
nes. To
t e ntl·ty purchases
A l, Entity A a govemmen would most likely debit the(:.
A
)
record a pure h ase, En,.;ty
c. Expense account
.
.
.
a.
b.
acco
unt
Inventory
Purchases account
d.
a or
b
f1 2_ Entity A, a
in its pharmacy. Entity
A
would
record
the
to
medicines
b.
c.
d.
f
3.
c.
Purchases
d.
None of these,
only a
note
disclosure
shall be made
8.
a
perpetual
inventory
c.
incur to acquire
held for sale
are
Books
d.
Forest products held for sale
to be
distributed
or
of the cost of
pharmacy
transactions
would
not
lead
inventoryas expense?
inventory is written down.
inventory is distributed for free.
inventory is exchangedfor dissimilar inventory.
inventory is consumed in the manufacturing process.
The
b.
The
c.
The
d.
The
The
accounting division
record
and
students in public schools
followingevents
recognition
entity
cost
·
government-owned
to
cost
------
government
the lower of
being sold by a
asset
an
Current replacement
d. Present value
c.
a
e
value
a.
Inventory Held for Sale
government entity, purchases relief goods which
distributed
when a
to be held on standby, ready to be
are
calamity strikes. Entity A would most likely classify the goods
purchased as
a.
lnventory Held for Consumption
b. Inventory Held for Distribution
entity would
Medicines
to the
Inventory Held for Consumption
Inventory Held for Distribution
Entity A,
an
Fair value
Which of the
p7.
Property
Semi-Expendable
inventory
.
b.
be soJd
acquiredas
the cost
in
periodk
a
mat?erof accounting
policy choice
current replacement cost?
of rice that
Inventories
a.
,
hospital,acquires medicines
government
a.
c6·
,
u
a
in
Which of the following
inventories ·ofa
would be subsequently
measured
at
·
,
to
realizable
Net
a.
the?e
as
reporting date.
the
on
large
ordinarily
ca ti on
Weighted average cost
applied
,system
d. Weighted average cost
applied
Entity·J\' s
ordinarilyinterchangeable,
¥2.5, assuming
were made.
tifi
C,
,
Under the Specific
of sale is !'2.
II?
1id en
for
FIFO
b.
e
.
Specifire
a.
'<>lq
identification
9.
:?
(1) blue
shall be used
that
are
and
monitor
of
the
a
government
movements
entity
and
uses
balances
inventories.
a.
Stock
Card
b.
Stock
Ledger Card
Journal Entry
d. SpecialJournal.
c.
this
to
of
-"1clp?
t
'
200
{r/¢1110!!!!----
>
201
correctly di//ere,,
staten'e,,ts
tia,.,
Jol)owil>g
o,rd?
II,
the
of
[,edger
Which
the srock
by
maintained
th e
is
Qud
Stock
o,rd
8oq
[,edger
is maintaine d
Stock
The
Stock Card
a.
by g?
.
9.
while th•
Division
is not.
Qud
Stock L,dger
audit by the COA
quantitiesonly
while
Card ,hows
The Stock
balances only.
shows monetary
Oud
Ledger
quantitiesonly whil
Card ,hows
c.
5!04
The
d.
,ubjed to
Stock Card is
The
Ledger Card
Cost of
a.
quantitiesas
shows
well
e
as
-:
"'hi!,
s
entry
al es
recogru·ze the
.
Welfare Goods
II,
Accow>tingDivi,;on.
b.
entity A, a gov??ent entity,
distributedwelfare
tJ,e intended recipients. The
to
').
Welfare Goods
for
Distribution costs
Welfare Goods
?.
c.
the St
°'I
for
the St
oc:1
The expense
None
d.
when
'
111<>net
<lty
to
physical
a
the Income
is
count
to
is
xxx
WelfareGoods Expensefor Distribution
b.
goods
event
XXX
XXX
'
Distribution
xxx
xxx
Distribution
xxx
recognized at the end
is pedonned.
The
of the
expense
Summary
account.
period
is closed
amounts
10. This
j)
document
prepared
that
of inventories
issuance
users
available
on
request
b.
Custodian
stock
for sale
following is
a.
Issue
ordinary
Purchases
of activities.
course
to
record the
to be
Which
held
d.
Current
govemment
entity,
determines
of goods held
for distribution
value
-
-
the
PI00,000
,so,ooo.
costrepla?e?ent
much
of
10,000
b.
20,000
Entity A,
purchase?
the
P90,000.
a
amount
of
the
inventory
C.
d. None of these
government
next
two
questions:
entity, determines
inventoryof
Units
xxx
Goods
the
A,
a
following
non-unique
Unit
Total Cost
Cost
Balance at
January 1, 20xl
3,000
P19.55
P 58,650
10,200
21.50
219,300
2,250
20.60
46,350
Purchases:
for
\
January 6, 20xl
January 26, 20x1
Sales:
January7, 20x1
January31, 2002
is
90,()()Q.
item:
xxx
xxx
Payable
a or b dependingon the accountingpolicy being used
a government
none,
entity cannot hold inventories
sale; only for consumption.
carrying
expense?
infonnation regarding the
xxx
Payable
a.
as
Use the followinginformationfor the
of the
Accounts
c.
•
recognized
entry
Inventory
Accounts
b.
amount
•
a
ti' on:
orma
Net realizable
How
Slip
the correct
Merchandise
following inf
Carrying
•
the
7-3:
in the
year-end, Entity A,
At
·
Order
MULTIPLE-CHOICE
·Entity A, a governmententity, purcha'Sesinventory
1.
3
Inv?ntorySlip
dJRequisition and
PROBLEM
for
Requisition
Purchase
Purchase
are
end
Form
a.
c.
-is
when
2,700
7,200