The Following Information Pertains to Inventory Held by a Company

question 31

Multiple Choice

The following information pertains to inventory held by a company on December 31, 2011. What is the amount of inventory loss shown on the income statement under IFRS?

• A) $0.
• B) $3,000.
• C) $14,000.
• D) $10,000.
• E) $8,400.

Distinguish cash outflows and inflows in the statement of cash flows.

Understand the concept of cash equivalents and their relevance to the statement of cash flows.

Recognize the impact of transactions on free cash flow.

Differentiate between the direct and indirect methods of preparing the statement of cash flows.

---

Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) is represented as a proportion of the total account.

Net Sales

The amount of sales revenue remaining after deducting sales returns, allowances, and discounts.

Comprehensive Income

The change in equity of a company during a period from transactions and other events, excluding any owner contributions and distributions.

Unrealized Loss

A financial loss that has occurred on paper due to the current market value being lower than the asset's purchase price, but has not yet been realized through sale.