Which cost is included in inventory when it is directly attributable to bringing the goods to their present condition?
Correct answer: B. Import duty paid on purchased materials
- A. Interest on a routine bank overdraft
- B. Import duty paid on purchased materials
- C. Storage after goods are ready for sale
- D. Commission paid to sales representatives
Explanation
Import duties that cannot be recovered are part of the purchase cost of inventory. Routine finance costs, post-production storage and selling commissions are generally recognized separately.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Inventory Valuation
Inventory valuation determines the cost of unsold goods and its effect on cost of sales and profit. The work covers inventory counts, included costs, FIFO and weighted-average costing, and the rule that inventory is reported at the lower of cost and net realisable value, not simply at its expected selling price.
Practise Inventory Valuation
34 free Inventory Valuation MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Inventory Valuation questions
A retailer has 80 units costing Rs. 15 each and buys 120 more units at Rs. 20 each. Under a periodic weighted average method, the cost per unit is:
Which statement best describes the weighted average cost method when identical inventory units are purchased at different prices?
If the net realisable value of inventory later increases, an earlier write-down under IAS 2 may be:
When production is abnormally low because of an unexpected factory shutdown, the unallocated fixed overhead is generally:
Raw materials may remain measured at cost rather than being written down when:
Which item is deducted from the purchase price when determining the cost of inventory under IAS 2?