SAINT COLUMBAN COLLEGE
PAGADIAN CITY
COLLEGE OF BUSINESS EDUCATION
MIDTERM_QUIZ
COVERAGE: PAS 2, PAS 41
1. In which of the following situations is the
net realizable value of an item of inventory
likely to be lower than cost?
a. The production cost of the item has
been falling
b. The selling price of the item has been
rising
c. The item is becoming obsolete
d. Demand for the item is increasing
2. Which of the following is not the outcome of
a biological transformation according to PAS
41?
a. Growth
b. Harvest
c. Procreation
d. Degeneration
For items 3-5. Identify whether the following items
would be accounted for under PAS 41 or not. Write
A, if the items is accounted for under PAS 41, write
B, if the item is outside the scope of PAS 41.
3. Logs held in a woodyard. B
4. Farmland which is used for growing
vegetables. B
5. A change in fair value of herd animals. A
6. How is gain or loss arising on a biological
asset recognized in accordance with PAS
41?
a. Included in profit or loss for the year
b. Adjusted in retained earnings
c. Shown in ‘other comprehensive income’
d. Deferred and recognized over the life of
the biological asset
7. If the term of a sale or purchase transaction
is FOB Shipping Point, ownership is
transferred
a. upon shipment of the goods
b. after production is finished
c. when the buyer receives the goods
d. either a or c
8. At each reporting period, inventories are
measured at LCNRV.
9. How should unallocated fixed overhead be
treated?
a. allocated to finished goods and cost of
goods sold
b. allocated to raw materials, work in
process and finished goods
c. recognized as an expense in the period
incurred
d. allocated to work in process, finished
goods, and cost of goods sold
10. TRUE OR FALSE. A conditional
government grant related to a biological
asset measured at FVLCS, including a
government grant that requires an entity
not to engage in specified agricultural
activity, shall be recognized in profit or loss
when the conditions attaching to the
government grant are met.
11. Inventories comprising agricultural produce
that an entity has harvested from its
biological assets are measured on initial
recognition at FAIR VALUE LESS COST TO SELL
12. Biological assets that have attained
harvestable specifications or are able to
sustain regular harvests are called MATURE
BIOLOGICAL ASSETS.
13. Which of the following is an agricultural
produce?
a. Tobacco plants
b. Sheep
c. Tea
d. Wool
14. This is the management of the biological
transformation and harvest of biological
 assets for sale or for conversion into in inventory at the end of the period are
agricultural produce or into additional those most recently purchased or produced
biological assets. __________ FIFO

15. TRUE OR FALSE. Entities often enter into 22. TRUE OR FALSE. The retail method is
contracts to sell their biological assets or often used in the retail industry for
agricultural produce at a future date. measuring inventories of large numbers of
Contract prices may be used in measuring rapidly changing items with similar margins
fair value. for which it is impracticable to use other
costing methods.
For items 16-18. Identify whether the following
items is a component of cost of inventory or
23-25. Identify the following as an agricultural
expensed immediately based on PAS 2. Write
activity within the scope of PAS 41 or not.
A, if the item is an element of cost, write B, if
Write Y, if it
the item is expensed immediately.
is an agricultural activity, write N, if
16. Cost of delivering raw materials to the otherwise
factory. A
17. Factory management overhead allocated 23. Growing of plants to be used in the
to production. A production of drugs. Y
18. Salaries of sales staff. B 24. Tuna fishing from ocean. N
25. Natural breeding of animals in zoos and
19. When a decline in the price of raw materials game parks. N
indicates that the cost of the finished
products exceeds net realizable value, the
materials are written down to net realizable
value. In such circumstances which of the
following is the best available measure of
the net realizable value of materials?
A. The replacement cost
B. General selling prices
C. Fair value less cost to sell
D. Estimated selling price less estimated
cost to sell and estimated cost of
completion

20. Entities must allocate the cost of all goods

available for sale between
a. the cost of goods on hand at the
beginning and the cost of goods
acquired during the period
b. the cost of goods on hand at the end
and the cost of goods acquired during
the period
c. the income statement and the
statement of financial position
d. all of the choices are correct

21. Assumes that the items of inventory that

were purchased or produced first are sold
first, and consequently the items remaining