Inventory Held by Businesses Operating in the Extractive Industries Should

question 17

Multiple Choice

Inventory held by businesses operating in the extractive industries should be valued at:

• A) lower of cost and net realisable value, including amortisation of pre-production cost
• B) net realisable value less an allowance for future rehabilitation costs
• C) net realisable value
• D) lower of cost and net realisable value, excluding amortisation of pre-production costs

Recognize the rights and obligations associated with bonds, including bond indentures and collateral agreements.

Differentiate between various types of notes and bonds, such as promissory notes, installment notes, and mortgages.

Understand the mechanics and implications of bond pricing, including discounts, premiums, and amortization methods.

Recognize the accounting treatment and financial reporting requirements for pension plans.

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Definitions:

Disbursement Basis

An accounting method in which expenditures and revenues are recorded when cash is actually disbursed or received, rather than when they are incurred.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction happens.

GAAP Constraint

Guidelines that restrict or limit certain accounting practices under Generally Accepted Accounting Principles, to ensure fairness, consistency, and accuracy in financial reporting.

Disbursement Basis

Accounting method where expenses are recorded when cash is paid out, rather than when incurred.