ACCA FA · Chapter 5 · Question 2 of 10
Which of the following costs should NOT be included in the cost of inventory under IAS 2?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Cost of delivering goods to customers
Explanation
The cost of inventory includes all costs of purchase, costs of conversion and other costs incurred in bringing inventories to their present location and condition. Carriage inwards, import duties and production labour all qualify. Delivery costs to customers are selling (distribution) costs and must be expensed.
More Inventory (IAS 2) MCQs
- Q4A business has three product lines in inventory at its year end: Product X: cost $2,400, NRV $3,100 Product Y: cost $5,600, NRV $4,900…
- Q5A business had the following inventory movements in March: 1 March: opening inventory 100 units at $5.00 4 March: purchased 200 units at…
- Q6A business uses the continuous weighted average cost (AVCO) method. Its inventory movements in March were: 1 March: opening inventory 100…
- Q7A company's year end is 31 December. Its inventory count took place on 7 January and valued inventory at cost of $48,300. Between 1…
- Q8Closing inventory at the end of 20X5 was overstated by $5,000. This error was not discovered and the opening inventory for 20X6 was…