ACCOUNTING FOR
MERCHANDISING ACTIVITIES
Item 1
Merchandise inventory is classified on balance
sheet as a
a. Current liability
b. Current asset
c. Long – term asset
d. Long – term liability
Item 1
Merchandise inventory is classified on balance
sheet as a
a. Current liability
b. Current asset
c. Long – term asset
d. Long – term liability
Item 2
The inventory system employing accounting
records that continuously disclose the amount
of inventory is called
• retail
• periodic
• physical
• perpetual
Item 2
The inventory system employing accounting
records that continuously disclose the amount
of inventory is called
• retail
• periodic
• physical
• perpetual
Item 3
Assuming that net purchase was P 900,000 during
the year and that ending merchandise inventory
was P 20,000 less than the beginning merchandise
inventory of P 250,000, how much was cost of
goods sold?
a. P 1,130,000
b. P 670,000
c. P 920,000
d. P 1,170,000
Item 3
Assuming that net purchase was P 900,000 during the year
and that ending merchandise inventory was P 20,000 less
than the beginning merchandise inventory of P 250,000,
how much was cost of goods sold?
a. P 1,130,000
SOLUTION:
b. P 670,000
Beg. 250,000
c. P 920,000
Add:Purchases 900,000
d. P 1,170,000
Total goods for sale
1,150,000
Less: Inv, end 230,000
COGS 920,000
Item 4
The December 31, 2018 trial balance for Aileen
Maglana Company included the following: purchases,
P 40,000; purchases returns and allowances, P 2,000;
transportation in, P 3,000; ending inventory was P
8,000. What was the cost of goods sold for 2018?
a. P 39,000
b. P 33,000
c. P 38,000
d. None of the above
Item 4
The December 31, 2018 trial balance for Aileen
Maglana Company included the following: purchases,
P 40,000; purchases returns and allowances, P 2,000;
transportation in, P 3,000; ending inventory was P
8,000. What was the cost of goods sold for 2018?
a. P 39,000 SOLUTION:
b. P 33,000 =40,000-2,000+3,000-8,000
c. P 38,000
d. None of the above
Item 5
On February 3, Smart Company sold merchandise in the amount of 4,300 to Truman Company, with credit terms of 3/10,
n/30. The cost of the items sold is 2,970. Smart uses the perpetual inventory system and the gross method. Truman pays the
invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
a. Cash 2,970
Accounts receivable 2,970
b. Cash 4,300
Accounts receivable 4,300
c. Cash 4,220
Sales discounts 89
Credit Accounts receivable 4,309
d. Cash 2,890
Accounts receivable 2,890
e. Cash 4,171
Sales discounts 129
Credit Accounts receivable 4,300
Item 5
On February 3, Smart Company sold merchandise in the amount of $4,300 to Truman Company,
with credit terms of 3/10, n/30. The cost of the items sold is $2,970. Smart uses the perpetual
inventory system and the gross method. Truman pays the invoice on February 8, and takes the
appropriate discount. The journal entry that Smart makes on February 8 is:
a. Cash 2,970
Accounts receivable 2,970
b. Cash 4,300
Accounts receivable 4,300
c. Cash 4,220
Sales discounts 89
Accounts receivable 4,309
d. Cash 2,890
Accounts receivable 2,890
e. Cash
4,171
Sales discounts 129
Accounts receivable 4,300
Item 6
On September 12, Vander Company sold merchandise in the amount of $7,400 to Jepson Company, with
credit terms of 3/10, n/30. The cost of the items sold is $4,800. Jepson uses the periodic inventory system
and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes
the appropriate discount. The journal entry that Jepson makes on September 18 is:
a. Purchases 7,178
Cash 7,178
b. Accounts payable
7,400
Merchandise inventory 222
Cash
7,178
c. Accounts payable 7,400
Purchases discounts
222
Cash
7,178
d. Cash 7,178
Accounts receivable 7,178
e. Cash 7,178
Purchases discounts 222
Credit Accounts payable 7,400
Item 6
On September 12, Vander Company sold merchandise in the amount of $7,400 to Jepson Company, with
credit terms of 3/10, n/30. The cost of the items sold is $4,800. Jepson uses the periodic inventory system
and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes
the appropriate discount. The journal entry that Jepson makes on September 18 is:
a. Purchases 7,178
Cash 7,178
b. Accounts payable
7,400
Merchandise inventory 222
Cash
7,178
c. Accounts payable 7,400
Purchases discounts
222
Cash
7,178
d. Cash 7,178
Accounts receivable 7,178
e. Cash 7,178
Purchases discounts 222
Credit Accounts payable 7,400
Item 7
A company purchased 3,700 of merchandise on July 5 with terms
2/10, n/30. On July 7, it returned 850 worth of merchandise. On July
12, it paid the full amount due. Assuming the company uses a
perpetual inventory system, and records purchases using the gross
method, the correct journal entry to record the payment on July 12
is:
a. Debit Merchandise Inventory 2,850; credit Cash 2,850.
b. Debit Cash 2,850; credit Accounts Payable 2,850.
c. Debit Accounts Payable 2,850; credit Merchandise Inventory 57;
credit Cash 2,793.
d. Debit Accounts Payable 3,700; credit Cash 3,700.
e. Debit Accounts Payable 2,850; credit Cash 2,850.
Item 7
A company purchased 3,700 of merchandise on July 5 with terms
2/10, n/30. On July 7, it returned 850 worth of merchandise. On July
12, it paid the full amount due. Assuming the company uses a
perpetual inventory system, and records purchases using the gross
method, the correct journal entry to record the payment on July 12
is:
a. Debit Merchandise Inventory 2,850; credit Cash 2,850.
b. Debit Cash 2,850; credit Accounts Payable 2,850.
c. Debit Accounts Payable 2,850; credit Merchandise Inventory 57;
credit Cash 2,793.
d. Debit Accounts Payable 3,700; credit Cash 3,700.
e. Debit Accounts Payable 2,850; credit Cash 2,850.
Item 8
If title to merchandise purchases passes to the
buyer when the goods are shipped from the
seller, the terms are
a. n/30
b. FOB shipping point
c. FOB destination
d. consigned
Item 8
If title to merchandise purchases passes to the
buyer when the goods are shipped from the
seller, the terms are
a. n/30
b. FOB shipping point
c. FOB destination
d. consigned
Item 9
Question
Which of the following accounts should be
closed to Income Summary at the end of the
fiscal year?
a. Merchandise Inventory
b. Accumulated Depreciation
c. Dividends
d. Cost of Merchandise Sold
Item 9
Question
Which of the following accounts should be
closed to Income Summary at the end of the
fiscal year?
a. Merchandise Inventory
b. Accumulated Depreciation
c. Dividends
d. Cost of Merchandise Sold
Item 10
Question
In credit terms of 3/15, n/45, the "3" represents
the
a. number of days in the discount period
b. full amount of the invoice
c. number of days when the entire amount is due
d. percent of the cash discount
Item 10
Question
In credit terms of 3/15, n/45, the "3" represents
the
a. number of days in the discount period
b. full amount of the invoice
c. number of days when the entire amount is due
d. percent of the cash discount
Item 11
For a merchandising firm, product cost includes
all of the following items except:
a. Freight – in cost
b. Merchandising packaging
c. Advertising expenses
d. The cost of merchandise itself
Item 11
For a merchandising firm, product cost includes
all of the following items except:
a. Freight – in cost
b. Merchandising packaging
c. Advertising expenses
d. The cost of merchandise itself
ACCOUNTING FOR
MANUFACTURING ACTIVITIES
Item 12
Work in process is
a. Sales less cost of goods sold
b. Sales plus cost of goods sold
c. Value of finished goods on hand
d. Value of partly finished goods
Item 12
Work in process is
a. Sales less cost of goods sold
b. Sales plus cost of goods sold
c. Value of finished goods on hand
d. Value of partly finished goods
Item 13
The items, raw materials inventory, work in
process, and finished goods inventory are MOST
likely seen together on a balance sheet of a
a. Garage
b. Shoe factory
c. Supermarket
d. Bus Company
Item 13
The items, raw materials inventory, work in
process, and finished goods inventory are MOST
likely seen together on a balance sheet of a
a. Garage
b. Shoe factory
c. Supermarket
d. Bus Company
Item 14
•
•
•
•
•
Work in progress as at January 1 1 600
Work in progress as at December 31 700
Cost of materials used 3 000
Indirect expenses 3 200
Factory wages 5 000
What is the cost of goods produced?
A. 8 000
B. 8 700
C. 11 100
D. 11 200
Item 14
•
•
•
•
•
Work in progress as at January 1 1 600
Work in progress as at December 31 1 700
Cost of materials used 3 000
Indirect expenses 3 200
Factory wages 5 000
What is the cost of goods produced?
A. 8 000
B. 8 700
C. 11 100
D. 11 200
Item 15
Which of the following may be used to calculate the cost of
production?
A. Prime cost + factory overheads - opening work in progress +
closing work in progress.
B. Prime cost - factory overheads - opening work in progress +
closing work in progress.
C. Prime cost + factory overheads - opening work in progress
- closing work in progress.
D. Prime cost + factory overheads + opening work in progress
- closing work in progress.
Item 15
Which of the following may be used to calculate the cost of
production?
A. Prime cost + factory overheads - opening work in progress +
closing work in progress.
B. Prime cost - factory overheads - opening work in progress +
closing work in progress.
C. Prime cost + factory overheads - opening work in progress
- closing work in progress.
D. Prime cost + factory overheads + opening work in progress
- closing work in progress.
Item 16
What is a prime cost?
a. The total of direct materials cost, all of the
direct labor and all direct expenses.
b. The total cost of all the most important cost
c. The of all direct materials cost and all of the
direct labor cost
d. The total of all direct cost and all of the
manufacturing overhead
Item 16
What is a prime cost?
a. The total of direct materials cost, all of the
direct labor and all direct expenses.
b. The total cost of all the most important cost
c. The of all direct materials cost and all of the
direct labor cost
d. The total of all direct cost and all of the
manufacturing overhead
Item 17
Which of the following are part of
manufacturing overhead
a. Direct Labor
b. Indirect Labor
c. Office Depreciation
Item 17
Which of the following are part of
manufacturing overhead
a. Direct Labor
b. Indirect Labor
c. Office Depreciation
Item 18
The depreciation on the machines used on the
manufacturing line is considered to be
____________a manufacturing cost.
a. A Direct
b. An Indirect
Item 18
The depreciation on the machines used on the
manufacturing line is considered to be
____________a manufacturing cost.
a. A Direct
b. An Indirect
Item 19
Commissions paid to sell products are reported
as part of cost of goods sold
a. TRUE
b. FALSE
Item 19
Commissions paid to sell products are reported
as part of cost of goods sold
a. TRUE
b. FALSE
Item 20
For the year ended 31 December 2018, the prime
cost was $80 000, factory overheads totalled 120
000, work in progress 1 January 2018 was 20 000
and at 31 December 2018 was 30 000. What was
the cost of production of finished goods?
A. 190 000
B. 200 000
C. 210 000
D. 220 000
Item 20
For the year ended 31 December 2018, the prime
cost was $80 000, factory overheads totalled 120
000, work in progress 1 January 2018 was 20 000
and at 31 December 2018 was 30 000. What was
the cost of production of finished goods?
A. 190 000
B. 200 000
C. 210 000
D. 220 000
Item 21
The following figures have been taken from the accounts of a manufacturing organization:
•
•
•
•
•
Cost of raw materials used 90 000
Direct wages 50 000
Indirect wages 30 000
Direct expenses 40 000
Indirect expenses 20 000
•
•
•
•
•
Which of the following figures represents the manufacturers' prime cost?
A. 230 000
B. 180 000
C. 140 000
D. 90 000
Item 21
The following figures have been taken from the accounts of a manufacturing organization:
•
•
•
•
•
Cost of raw materials used 90 000
Direct wages 50 000
Indirect wages 30 000
Direct expenses 40 000
Indirect expenses 20 000
•
•
•
•
•
Which of the following figures represents the manufacturers' prime cost?
A. 230 000
B. 180 000
C. 140 000
D. 90 000
Item 22
Which of the following is a direct cost
a. Factory rent
b. Production workers’ wages
c. Factory supervisor’s salary
d. Factory machine maintenance
Item 22
Which of the following is a direct cost
a. Factory rent
b. Production workers’ wages
c. Factory supervisor’s salary
d. Factory machine maintenance
Item 23
In a manufacturing company, the costs debited to
the Work in Process Inventory account represent:
a. Direct materials used, direct labor, and
manufacturing overhead.
b. Cost of finished goods manufactured.
c. Period costs and products costs.
d. None of the above; the types of costs debited to
this account will depend upon the type of products
being manufactured.
Item 23
In a manufacturing company, the costs debited to
the Work in Process Inventory account represent:
a. Direct materials used, direct labor, and
manufacturing overhead.
b. Cost of finished goods manufactured.
c. Period costs and products costs.
d. None of the above; the types of costs debited to
this account will depend upon the type of products
being manufactured.
Item 24
The accounting records of Newport Mfg. Co. include the following information for 2000:
Dec. 31
Jan. 1
Inventory of work in process
$20,000
$10,000
Inventory of finished goods
80,000
60,000
Direct material used
200,000
Direct labour
120,000
Manufacturing overhead (150% of direct
labour)
180,000
Selling expenses
150,000
Indicate which of the following are correct: (More than one answer may be correct.)
a. Amount debited to the Work in Progress Inventory account during 2000, $500,000
b. Cost of finished goods manufactured, $490,000
c. Costs of goods sold, $470,000
d. Total manufacturing costs for the year, $650,000
Item 24
The accounting records of Newport Mfg. Co. include the following information for 2000:
Dec. 31
Jan. 1
Inventory of work in process
$20,000
$10,000
Inventory of finished goods
80,000
60,000
Direct material used
200,000
Direct labour
120,000
Manufacturing overhead (150% of direct
labour)
180,000
Selling expenses
150,000
Indicate which of the following are correct: (More than one answer may be correct.)
a. Amount debited to the Work in Progress Inventory account during 2000, $500,000
b. Cost of finished goods manufactured, $490,000
c. Costs of goods sold, $470,000
d. Total manufacturing costs for the year, $650,000