multiple choice

12. If gross profit rate is based on sales then a. Net sales is sales is more than 100%. b. Cost of more than 100%. c. Cost is less than 100%. d. Net sales is less than 100%. 13. All of the following are common reasons for making an estimate of the cost of goods on hand, except: a. Inventories were destroyed by fire. b. Preparation of interim financial reports. c. Validation for physical count reasonableness. d. Mere request by a division within the company. 14. Pepe Co. buys and sells antiques. Each product in unique. If the entity adopts IAS 2 Inventories, the company a. Is required to use specific identification method. b. Is required to use FIFO method. c. Is required to use average method. d. Has the option of using either FIFO or specific identification. 15. Under the concept of FOB destination: a. Ownership is transferred to the buyer upon the receipt of the goods purchased. b. Ownership is transferred to the buyer upon the shipment of the goods purchased. c. Ownership remains with the seller upon the shipment of the goods purchased. d. Ownership remains with the seller even if the buyer already received the goods. 16. This is defined as a contract evidencing residual interest in the assets of a company after deducting all of its liabilities: a. Debt instrument. b. Equity instrument. c. Financial asset. d. Receivable. 17. What method of accounting is used to account for investments in associate? a. Cost method. b. Fair value method. c. Equity method. d. Consolidation method. 18. Goodwill arising from investment in associate is a. Recognized separately from the investment account. b. Included in the carrying amount of the investment and not recognized separately. c. Reported as a separate account from investment. d. Presented under non-current assets. 19. Previously held securities shall be remeasured at a. Cost. b. Carrying amount. c. Fair value. d. Fair value less costs to sell. 20. Investments in associate are normally presented under a. Short-term investments. b. Current assets. c. Noncurrent assets. d. Fixed assets