BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

SPECIFIC ACCOUNTING TREATMENTS

1. What are inventories?

2. How sould be measured inventories?

3. What represent the Net Realizable Value?

4. What represents the cost of inventories?

5. What represents the cost of purchase?

6. What represents the cost of conversion?

8. What represents the variable production?

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7. What represents the fixed production overheads?

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015
9. Which are the cost formulas?

10. What assumes FIFO, LIFO, WAC?

11. It is justified to use different cost formulas?

12. In our country is allowed to use LIFO ?

13. What represents VAT?

14. What is deductible VAT (input VAT)?

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15. What represents collectible VAT (output VAT)?

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015
16. What means if DVAT<CVAT?

17. What means if DVAT>CVAT?

18. What means compensation?

19. What comprises the cost of an item of PPE?

20. What is the depreciation?

21. What is the depreciable amount?

22. What is a residual value?

23. What is the useful life?

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24. What is the carrying amount?

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015
25. Which are the depreciation methods?

26. What means that a PPE is disposed?

27. What do you know about the accounting treatment for non current assets?

28. How many depreciation methods do you know? Which are these methods?

29. What do you understand by the straight line method of depreciation?

30. What do you understand by the fractional perios depreciation?

31. What do you understand by the units of output method of depreciation?

33. What do you know about the accounting treatment for equity?

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32. What do you understand by the accelerated method of depreciation?

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

34. What do you know about the accounting treatment for financial liabilities?

35. Ex. 1/ Page 167 Cost classification You are required to put a tick in the relevant box
to indicate the category (purchase, conversion or other) for each of the costs in the
following table:
Cost heading

Costs of

Conversion

Other

purchase

costs

costs

Depreciation of manufacturing
Import duties
Fixed production overheads
Factory supervision costs
Rebates received
Transporting inventory from supplier to customer
Direct labor costs associated with production
Purchase price

36. Ex. 2/ Page 167 Cost of inventories Put a tick in the relevant box to indicate which
costs are excluded from the cost of inventories:
Cost heading

Excluded

Abnormal amounts of waste

Salaries of managers
Depreciation of manufacturing machinery
Direct labor (productive personnel)
Purchase price
Rebated received
Storage costs, not necessary for a further

Selling costs
Special design for products

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production stage

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015
37. Ex. 3/ Page 168 Cost formulas and increasing prices A company has 50 units of
merchandise on hand at the beginning of the year, at 100 RON per unit. January 9, the
company buys 150 units of merchandise at 120 RON per unit, and January 17, the
company buys 200 units of merchandise at 130 RON per unit. January 14, the company
sells 100 units for 125 RON, and January 25, the company sells again 150 units of
merchandise, for 135 RON. Compute the cost of goods sold, the income and the value of

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the ending inventory under FIFO, WAC and LIFO.

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

38. Ex. 4/ Page 168 Cost formulas and decreasing prices A company has 200 units of
merchandise on hand at the beginning of the year. At 50 RON per unit. January 3, the
company buys 800 units of merchandise at 45 RON per unit, incurring 4.000 RON as
transportation costs; January 23, the company buys 1.100 units of merchandise at 40
RON per unit. January 7, the company sells 900 units for 50 RON and January 27, the
company sells again 1.000 units of merchandise, for 45 RON. Compute the cost of
goods sold, the income and the value of the ending inventory under FIFO, WAC and

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LIFO.

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015
39. Ex. 5/ Page 168 Conversion costs A company incurs as production costs the
following: unitary variable production cost 100 RON, fixed costs 200.000 RON.
Compute the production cost in each of the following cases:
a) production level 4.000 products;
b) production level 5.000 products;

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c) production level 6.000 products;

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015
40. Ex. 6/ Page 168 Transactions regarding inventories and cost formulas Assume that
October 5, 2013, a company purchased for cash 50 units of merchandise at 100 RON
per unit, incurring transportation costs of 1.000 RON to bring the merchandise to the
location. On October 10, 2013, the company purchased on credit 150 units of
merchandise, for a total amount of 22.500 RON, rebate offered by the seller 10 RON
per unit. October 15, 2013, the company sells 175 units of merchandise on credit for
200 RON per unit. October 20, 2013, the company collects the money from the sale.
October 25, 2013, the company pays the suppliers for these transactions. You are
required to:

journalize the transactions of the company for the month of October, 2013 and

compute the profit of the company under each of the cost formulas that can be

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used and comment the results

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

41. Ex. 10/ Page 169 Costs of conversion, inventory valuation and measurement at year
end A company incurs the following as production costs: unit variable cost 40 RON,
fixed costs 400.000 RON, abnormal waste materials 4.000 RON, storing and selling

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costs of finished goods 3.000 RON. Compute the production costs ()

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

42. Ex. 7/ Page 169 Measurement at year end As of December 31, 2012, a companys
management considers that it could sell for 20.000 RON its 2.000 units of
merchandise that had cost 10,5 RON. The estimated selling expenses would amount at

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500 RON. What is the value of the inventories in the balance sheet drawn end 2012?

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

43. Ex. 8/ Page 169 Measurement at year end As of December 31, 2012, a companys
management considers that it could sell for 20.000 RON its 2.000 units of
merchandise, that cost 10,5 RON. The estimated selling expenses would amount 500
RON. The write-down of merchandise account had an opening balance of 500 RON.
What influence woud have this finding on the income statement? Journalize the

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necessary entries at the end of the year.

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BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

ACCOUNTING, FIBE FACULTY, FIRST YEAR, 2014-2015

44. Ex.9/ Page 169 Cost of conversion and measurement at year end A company incurs
the following as production costs: unit variable cost 60 RON, fixed costs 400.000
RON. Compute the production costs (costs of conversion) in total and per unit if the
actual level of production is 5.000 products and the normal capacity of production is
8.000 products. Ar the year end, the net realizable value is 530.000 RON. The writedown of merchandise account had an opening balance of 30.000 RON. What is the
proper accounting treatment of that account and what is the inventorys value in the

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balance sheet drawn at the end of the year?

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