10- An item of inventory was purchased for SR500. It is expected to be sold for SR700 although SR250 will need to be spent on it in order to achieve the sale. To replace the same item of inventory would cost SR620. At what value should this item of inventory be included in the financial statements? SR500 SR700 SR620 SR450 a) b) c) d) 11- If ending inventory is overvalued: a) Assets are overstated in the statement of financial position. b) Assets are understated in the statement of financial position. c) Profit is understated in the statement of profit or loss (as cost of sales is too high). d) There is no impact on either statement of financial position or statement of profit or loss.
10- An item of inventory was purchased for SR500. It is expected to be sold for SR700 although SR250 will need to be spent on it in order to achieve the sale. To replace the same item of inventory would cost SR620. At what value should this item of inventory be included in the financial statements? SR500 SR700 SR620 SR450 a) b) c) d) 11- If ending inventory is overvalued: a) Assets are overstated in the statement of financial position. b) Assets are understated in the statement of financial position. c) Profit is understated in the statement of profit or loss (as cost of sales is too high). d) There is no impact on either statement of financial position or statement of profit or loss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q:10 , 11
Plzz answer both
Transcribed Image Text:10- An item of inventory was purchased for SR500. It is expected to be sold for SR700 although SR250 will need to be spent on
it in order to achieve the sale. To replace the same item of inventory would cost SR620. At what value should this item of
inventory be included in the financial statements?
SR500
SR700
SR620
SR450
a)
b)
c)
d)
11- If ending inventory is overvalued:
a) Assets are overstated in the statement of financial position.
b)
Assets are understated in the statement of financial position.
Profit is understated in the statement of profit or loss (as cost of sales is too high).
There is no impact on either statement of financial position or statement of profit or loss.
c)
d)
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