Which of the Following Scenarios Will Not Be Allowed Under

question 19

Multiple Choice

Which of the following scenarios will not be allowed under IFRS?

• A)A landscaping and garden retail store keeps piles of river rock,gravel,paving stones,and small decorative rocks in a fenced area on the side of the store.The store uses the most recent inventory costs when calculating cost of goods sold,since new inventory is piled on top of the older inventory.
• B)A grocery store strictly enforces a shelf rotation policy,so that older inventory is always at the front and sold first.The store uses the oldest inventory costs to calculate cost of goods sold.
• C)A farm chemical supplier maintains a large holding tank of chemicals,into which deliveries are periodically combined with the older chemicals.The supplier averages the cost of all inventory to calculate cost of goods sold.
• D)All of the above are acceptable under IFRS.

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Definitions:

Comparative Advantage

An economic theory stating that an entity is able to produce goods or services at a lower opportunity cost than others, leading to more efficient trading possibilities.

Producing Firewood

The process of cutting, splitting, drying, and preparing wood to be used as fuel for heating or cooking.

Producing Wool

The process of growing, harvesting, and processing wool fibers from sheep or other animals for use in textile production.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.