Financial Reporting And Analysis - Financial Reporting And Analysis Section 2
61. Which of the following costs is least likely to be included in inventory?
- Option : C
- Explanation : Inventory costs include: cost of raw materials, cost of conversion and cost necessary to bring inventory to final location and condition. The cost of storing finished goods inventory is expensed and hence not included in the inventory cost.
62. Which of the following is least likely to reduce the purchase price of inventories?
- Option : B
- Explanation : Tax related duties are an expense and increase the purchase price of inventories.
63. The purchase price of inventories will most likely increase due to which of the following?
- Option : A
- Explanation : Transport and handling costs increase the cost of inventory. Trade discounts and rebates reduce the cost of inventory.
- Option : C
- Explanation : Specific identification best matches the physical flow of the inventory items because it tracks the actual units that are sold.
