Accounting for Materials

This a type of inventory which constitute the primary input of production

• Materials

• Work in process

• Finished goods

• Merchandise Inventory

All of the following shall be recorded under materials , except

• Freight

• Insurance

• Recoverable taxes

• Import duties

All of the following shall be excluded in the cost of raw materials, except

• Purchase discount

• Purchase returns

• Purchase allowances

• Freight

Under IAS 2, Raw materials shall be measured at

• Lower of Cost or Net realizable value

• Lower of Cost or Replacement Cost

• Lower of Cost or Market

• All of the above

A company bought on account, 2,000 units of materials at 5/unit under 2/10, net 30, under Net Method, raw materials shall be recorded

• Dr. Materials 10,000

  Cr. AP 10,000

• Dr. Materials 9,800

  Dr. Purchase discount 200

  Cr. AP 10,000

• Dr. Materials 9,800

  Cr. AP 9,800

• None of the above

Using the previous information, the journal entry if the company paid on the 10th day should be

• Dr. AP 9,800

  Cr. Cash 9,800

• Dr. AP 10,000

  Cr. Cash 10,000

• Dr. AP 9,800

  Cr. PD Lost 200

  Cr. Cash 10,000

• Dr. AP 9,800

  Dr. PD Lost 200

  Cr. Cash 10,000

Using the previous information, the journal entry if the company paid on the 12th day should be

• Dr. AP 9,800

  Cr. Cash 9,800

• Dr. AP 10,000

  Cr. Cash 10,000

• Dr. AP 9,800

  Cr. PD Lost 200

  Cr. Cash 10,000

• Dr. AP 9,800

  Dr. PD Lost 200

  Cr. Cash 10,000

A company bought raw materials of 500 units at 100 each under FOB Shipping point Freight Collect. Freight cost is 20/unit. Cost of direct materials is

• 50,000

• 60,000

• 40,000

• None of the Above

A company bought 1,000 units of raw materials under FOB Shipping Point Freight Prepaid. Credit term 3/15, Net 45. Unit cost is 100 and the freight cost is 20 per unit. Cash payment if paid within the discount term should be

• 95,000

• 117,000

• 116,400

• None of the above

A company bought 1,000 units of raw materials under FOB Destination Freight Collect. Credit term 3/15, Net 45. Unit cost is 100 and the freight cost is 20 per unit. Cash payment if paid within the discount term should be

• 95,000

• 117,000

• 116,400

• None of the above