1. Which of the following is not true about accounting for inventory under PAS 2?

A. Interest cost may be capitalized if there is a lengthy production period to prepare goods for sale

B. The weighted-average method is acceptable

C. FIFO is allowed

D. Inventories are always valued at net realizable value

2.

If the selling price of inventory that has been written down to net realizable value in a prior period, subsequently recovers, the:

A. Previous amount of the write-down can be reversed.

B. Adjustment must be recognized in a provision for future inventory write-downs account.

C. Value adjustment can be recognized immediately in equity.

D. Carrying amount of the inventory cannot be adjusted.

3. Under PAS 2 Inventories, items of inventory that are used by business enterprise as components in a self-constructed property asset are required to be:

A. Aggregated into the cost of goods sold expense in the period in which the items are used.

B. Capitalized and depreciated.

C. Expensed directly into equity in the period in which the items are used.

D. Added to a property construction provision account.

4. In accordance with PAS 2, which of the following should be disclosed in relation to measurement of inventories at the lower of cost and NRV?

A. The circumstances or events that led to the reversal of a write-down of inventories.

B. All of the above.

C. The amount of any write-down of inventories recognized as an expense in the period.

D. The amount of any reversal of any write-down that is recognized as a reduction in the amount of inventories recognized as expense in the period.