Chapter 7 PDF

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CHAPTER 7 According to the GAM for NGAs, inventories of government entities are subsequently measured at net realizable values or current replacement cost depending on the whether the inventory isclassified as held for sale or held for distribution. FALSE According to the GAM for NGAs, purchase of m...

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CHAPTER 7

1.

According to the GAM for NGAs, inventories of government entities are subsequently

measured at net realizable values or current replacement cost depending on the whether the inventory isclassified as held for sale or held for distribution. FALSE 2.

According to the GAM for NGAs, purchase of machinery, equipment, furniture and fixtures

and similar items below the P10,000 capitalization threshold for PPE are recorded as inventories by a government entity. FALSE 3.

Relief goods, office supplies, equipment and furniture and fixture are items that may

appropriately be recorded as inventories by a government entity. TRUE 4. The GAM for NGAs allows government entities to use the FIFO cost flow formula. FALSE 5. The GAM for NGAs allows government entitiesto use the periodic inventory system. FALSE 6.

The specific identification cost formula is not available for use by government

entities,according to the GAM for NGAs. FALSE 7.

The purchase request (PR) form is prepared when end users request for the issuance of

items of inventory that are available on stock. FALSE 8.

If the beginning balance of inventory is P50, the net purchases are P100 and the cost of

goods sold is P30, the ending inventory must be P120. FALSE

Entity A, a government entity, sells eggs. At thestart of the period, Entity A’s inventory consisted of 1 red egg with a carrying amount of P2. During the period, Entity A acquired 1 brown egg for P3 and 1 blue egg for P4. Entity A sold the brown egg during the period. 9. Under the specific identification cost formula,entity A’s cost for sale is P2. FALSE 10. If the eggs are ordinarily interchangeable, entity A’s cost of sale is P25, assuming the sale occurred only after all the purchases were made. FALSE 11. Entity A, a government entity, purchases inventories. To record a purchase, Entity Awould most likely debit the (an) INVENTORY ACCOUNT 12. Entity A, a government hospital, acquires medicines to be sold in its pharmacy. Entity Awould record the medicines acquired as INVENTORY HELD FOR SALE 13. Entity A, government entity, purchases relief goods which are to be held on standby, ready to be distributed when a calamity strikes. Entity A would most likely classify the goods purchased as INVENTORY HELD FOR DISTRIBUTION 14. According to the GAM for NGAs, this shall be used for large numbers of items of inventory that are ordinarily interchangeable. WEIGHTED AVERAGE COST APPLIED IN A PERPETUAL INVENTORY SYSTEM 15. This refers to the cost an entity would incur to acquire an asset on the reporting date. CURRENT REPLACEMENT COST

16.

Which of the following inventories of a government entity would be subsequently

measured at the lower of cost and current replacement cost? BOOKS TO BE DISTRIBUTED TO STUDENTS IN PUBLIC SCHOOLS 17. Which of the following events of transactions would not lead to the recognition of the cost of inventory as expense? INVENTORY WRITTEN DOWN 18. The accounting division of a government entity uses this to record and monitor the movements and balances of inventories. STOCK CARD 19. Which of the following statements correctly differentiates the stock card from the stock ledger card? THE STOCK CARD SHOWS QUANTITIES ONLY WHILE THE STOCK LEDGER CARD SHOWS QUANTITIES AS WELL AS MONETARY AMOUNTS 20. This document is prepared when end users request for the issuance of inventories that are available on stock. REQUISITION AND ISSUE SLIP 21. Entity A, a government entity, purchases inventory to be held for sale in the ordinary course of activities. Which of the following is the correct entry to record the purchase? (DEBIT) MERCHANDISE INVENTORY (CREDIT) ACCOUNTS PAYABLE 22. Entity A, a government entity, distributed welfare goods to the intended recipients. The entry to recognize the event is (DEBIT) WELFARE GOODS EXPENSE (CREDIT) WELFARE GOODS FOR DISTRIBUTION 23. At year-end, Entity A, a government entity, determines the following information:

*Carrying amount of goods held for distribution - P100,000 *Net realizable value - P80,000 *Current replacement cost - P90,000 How much of the carrying amount of the inventory is recognized as expense? 10,000 24. How much is ending inventory? 116,382 25. How much is the cost of sale? 207,918 26. Entity A, a government entity, purchases furniture and fixture amounting to P14,000.Entity A would most likely record the purchase as SEMI-EXPENDABLE PROPERTY 27. Accountable forms such as pre-printed forms used in government transactions are likely to be classified by a government entity as INVENTORY HELD FOR CONSUMPTION 28. Inventories are initially measured at cost and subsequently measured at A.THE LOWER OF COST AND NET REALIZABLE VALUE FOR GOODS HELD FOR SALE B.THE LOWER OF COST AND CURRENT REPLACEMENT COST FOR GOODS HELD FOR DISTRIBUTION C.A AND B 29. Which of the following cost formulas is not available for use by government entities? FIFO 30.

The GAM for NGAs requires the use of which of the following inventory systems?

PERPETUAL INVENTORY SYSTEM

31. Government entities record purchases of inventories IN AN INVENTORY ACCOUNT 32. Which of the following may be included as cost of inventory? ADVERTISEMENT COST THAT RESULTED TO THE RESALE OF INVENTORY PURCHASED 33. Arrange the following in the sequence they are used in the requisition and receipt of inventories by a government entity I. Inspection and Acceptance report (IAR)II. Disbursement Voucher (DV) III. Purchase Request (PR)IV. Journal Entry V. Purchase Order (PO)VI. Stock card (SC) III, V, I, VI, IV AND II 34. This is maintained in the Property/Supply Division to record the movements of inventories STOCK CARD (SC) 35. This is used to report wasted materials, such as destroyed spare parts and other spoilages. WASTE MATERIALS REPORT...