[QUIZ 2] TRUE OR FALSE

The term "financial instrument" encompasses both financial asset and financial liability but not the entity's own equity instrument.

TRUE

Transaction costs are incremental costs that are indirectly attributable to the acquisition, issue or disposal of a financial asset or financial liability.

TRUE

Under the periodic inventory system, the "Inventory" account is updated only when a physical count is performed. Thus, the amounts of inventory and cost of goods sold are determined only periodically.

TRUE

Unrealized gain and loss on financial asset at amortized cost are not recognized simply because such investments are not reported at fair value.

TRUE

Ending inventory and Profit or loss have a direct relationship. Direct relationship means that if ending inventory is understated, net income is also understated.

TRUE

Goods in transit, shipped FOB shipping point, are included in the buyer's statement of financial position at the time of delivery to the common carrier.

TRUE

If both purchases and ending inventory are overstated by the same amount, net income is not affected.

TRUE

If the carrying amount is lower than fair value, the difference is unrealized gain.

TRUE

Net realizable value is different from fair value.

TRUE

Only debt instruments can be classified under the amortized cost measurement category.

TRUE

Purchase Discounts Lost is a financial expense and is reported in the "other income and expense" section of the income statement.

TRUE

Unrealized gain and loss arise from investments that are reported at fair value.

TRUE

All fair value changes in financial assets measured at fair value must be recognized in profit or loss.

FALSE. Can be through other comprehensive income.

During the year, an entity acquires investment in equity securities and appropriately capitalizes the broker' commission incurred on the acquisition. The investment must have been classified under the fair value through profit or loss measurement category.

FALSE. FVPL recognizes transaction costs as an expense.

Freight charges on goods purchased are considered a period cost and therefore are not part of the cost of the inventory.

FALSE. Freight is a product/inventoriable cost

When using a perpetual inventory system, freight charges on goods purchased are debited to Freight-In.

FALSE. If perpetual, freight-in is recorded in Inventory account

If a supplier ships goods f.o.b. destination, title passes to the buyer when the supplier delivers the goods to the common carrier.

FALSE. It should be FOB Shipping Point

Under First-In, First-Out (FIFO), it is assumed that inventories that were purchased first are sold first, and therefore unsold inventories at the end of the period are those first purchased or produced.

FALSE. Leftover inventory are goods purchased LAST.

Financial assets, except those that are designated, are classified on the basis of either the entity's business model for managing the financial assets or the contractual cash flow characteristics of the financial asset.

FALSE. Remove "except those that are designated"

Investment transactions are considered principal to an entity's main operations and are normally made through the use of idle or excess cash rather than the entity's main working capital. You Answered

FALSE. They aren't principal business operations.