Net Realisable Value of Inventories May Fall Below Cost for a Number

question 7

Multiple Choice

Net realisable value of inventories may fall below cost for a number of reasons including:
I Product obsolescence
II Physical deterioration of inventories
III An increase in the expected replacement costs of the inventory
IV An increase in the estimated costs of completion

• A) I, II and IV only;
• B) I, III and IV only;
• C) II, III and IV only;
• D) I and II only.

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Definitions:

Responsible Person Doctrine

A legal principle that holds an individual in a business or enterprise accountable for ensuring compliance with tax laws and regulations.

Acting in Good Faith

A principle of honesty and fairness in dealings, implying the absence of fraud, deceit, or intent to deceive in a transaction or interaction.

Leveraged Buyout (LBO)

A takeover-resistance strategy in which a group within the target corporation buys all the corporate stock held by the public, thereby turning the company into a privately held corporation.

Outstanding Corporate Stock

Shares of a corporation that have been issued and are currently owned by shareholders.