FUNDAMENTALS OF ACCOUNTING BUSINESS , & MANAGEMENT 2

EXERCISE 1:
Instruction: Choose the letter that corresponds to your answer

1. It is the account used by the merchandisers and manufacturers for the selling of goods.
a. Sales Revenue
b. Service Revenue
c. Freight - out
d. Cost of goods sold

2. It is a statement where revenues and expenses are presented.

a. Statement of cash flows
b. Statement of cahnges in owner's equity
c. Statement of financial position
d. Statement of comprehensive income

3. It is deducted from the list price to arrive at the invoice price

a. Trade discount
b. Cash discount
c. Purchase discount
d. Sales Discount

4. These are the items bought with the intention of selling for profit
a. Equipment
b. Supplies
c. Machine
d. Merchandise Inventory

5. It is the actual amount charged to the buyer and may subject further to cash discount.
a. List price
b. Discounted price
c. Selling price
d. Invoice price

6. It is given to customers to encourage early payment on sales on account.

a. Trade discount
b. Cash discount
c. Purchase discount
d. Sales discount

7. It is a statement of comprehensive income showing several intermediate margin figures representing the different activities
a. Multi-step
b. Account form
c. Single step
d. Report form
8. It represent cost of merchandise sold to the customers
a. Selling cost
b. Cost of golds sold
c. List price
d. purchase price

9. It is an additional cost to purchase and is generally paid by the buyer

a. Freight-out
b. Gasoline expense
c. Transportation expenses
d. Freight-in

10. All the revenues are added together and the sum of all expenses is deducted from the total revenues to arrive at net incom
a. Multi-step
b. Account Form
c. Single Step
d. Report form

11. One of the folowing is found in the heading of the statement of comrehensive income.
a. As of December 31, 2023
b. As of 5:00 in the afternoon of December 31, 2023
c. December 31, 2023
d. For the year ended December 31, 2023

12. Cash discount on purchases is deducted from the following:

a. Accounts Receivable
b. Accounts Payable
c. List price
d. Invoice price

13. Which of the following accounts is included in the statement of comprehensive income?
a. Accounts payable
b. RTL, Capital
c. Professional fees
d. Unearned Revenue

14. To arrive at the net income, the operating expenses are deducted from which of the following?
a. Sales
b. Net Sales
c. Cost o Sales
d. Gross profit

15. To arrive at the net income, the cost of goods sold is deducted from which of the following?
a. Sales
b. Net Sales
c. Cost o Sales
d. Gross profit
16. What is the effect on the company's net income when the customers paid its obligation within the discount period?
a. It will increase
b. It will decrease
c. No effect
d. Cannot be determined

17. What is the effect of freight -out to the company's gross profit?
a. It will increase
b. It will decrease
c. No effect
d. Cannot be determined

18. Which of the following is selling expenses?

a. Purchase discount
b. Freight-out
c. Freight-In
d. Salary of accounting clerk

19. Which of the following properly computes the gross profit?

a. Net sales less (goods acailable for sale- merchadise inventory)
b. Net sales less (purchases+freight-in+purchase returns and discounts-merchandise inventory end)
c. Net sales less goods available for sale
d. Gross sales less sales returns and discount less merchandise inventory at the end.

20. Which of the following will resultto a net loss of a merchandisin company?
a. Net sales exceeds operating expenses.
b. Net sales exceeds gross margin
c. Cost of sales exceeds operating expenses
d. Operating expenses exceeds gross margin.

EXERCISE # 2
Instruction: Choose the letter of your answer and show your solution.

1. The list price of the goods bought is 95,000.00 with trade discount of 5% and credit term is 2/10, n/30.
What is the amount to be recorded as purchases.

a. 90,250.00
b. 95,000.00
c. 99,750.00
d. answer not given

2. A merchant has a list price of 250,000.00. If a trade discount is given as 5%, 3% and 1%, what will be the invoice price of the
a. 250,000.00
b. 237,500.00
c. 230,375.00
d. 228,071.00

3. Mr. Tang sold a merchandise on account, P125,000 with terms 2/10, n/30. How much is the net sales to be reported if paid
 a. 112,500.00
b. 122,500.00
c. 125,000.00
d. 127,500.00

4. Mr. Tang sold merchandise on account, P125,000.00 with terms 2/10, n/30. How much is the net sales to be reported if pa
a. 112,500.00
b. 122,500.00
c. 125,000.00
d. 127,500.00

5. The following information is available for the Victory Company for the year 2023.
Units sold 36,000.00
Selling price per unit P100
Cost per unit P60

What is the cost of goods sold?

a. 1,440,000.00
b. 2,160,000.00
c. 3,600,000.00
d. None of the above

Items 6 to 8. The following transactions pertain to the purchases of merchandiseGArry Store for the year 2023, its first year of
→ Purchase of merchandise at an invoice price of P480,000.00, excluding freight. Terms 2/10, n/30
→ Freight paid P20,000.00
→ Cash payment on purchases, P398,000.00, of which P98,000.00 was paid witin the dscount period.
→ On December 31, 2023, P100,000.00 of the merchandise inventory remains to be unsold.

6. How much is thepurchase discount?

a. 2,000.00
b. 8,122.00
c. 10,000.00
d. Cannot be determined

7. What is the cost of goods sold?

a. 380000
b. 400000
c. 398000
d. Cannot be determined

8. How much is the remaining accounts payable to Garry Store?

a. 100,000.00
b. 98,000.00
c. 80,000.00
d. Cannot be determined

9. The following data pertains to the inventory of Astitda Maysayad

Purchases 1,200,000.00
 Purchase returns 200,000.00
Purchase discount 20,000.00
Freight-in 250,000.00
Freight-out 300,000.00
Merchandise inventory, begginine 75,000.00

How much is the total goods available for sale?

a. 1,275,000.00
b. 1,230,000.00
c. 1,305,000.00
d. 1,450,000.00

10. XYZ Corporation had a purchases of P900,000.00 during the year.

The ending inventory was P30,000.00 less than the beginning inventroy of P350,000.00. How much is the cost of go
a. 870,000.00
b. 920,000.00
c. 930,000.00
d. 1,250,000.00

11. - 14. the current year report of ABC, Industry showed:

Purchases, P80,000.00; purchase returns and allowances, P40,000.00; freight-in P3,000.00 and ending inventory of

11. What is the total cost of purchases?

a. 79,000.00
b. 80,000.00
c. 83,000.00
d. 63,000.00

12. What is the net cost of purchases?

a. 79,000.00
b. 80,000.00
c. 83,000.00
d. 63,000.00

13. What was the amountof the total goods available for sale?
a. 79,000.00
b. 80,000.00
c. 83,000.00
d. 63,000.00

EXERCISE 3.
The following information were taken from the books of Maria Mot on December 31, 2018.

Merchandise Inventory, January 1 140,000.00

Merchandise Inventory,December 125,000.00
Sales 680,650.00
Sales Returns and allowances 85,000.00
 Sales Discount 75,000.00
Purchases 535,500.00
Purchase Returns and allowances 11,000.00
Purchase discounts 5,300.00
Freight-in 12,500.00
Salaries expenses- Selling 30,500.00
Salaries expenses- Administrative 21,750.00
Advertising expense 42,000.00
Supllies expense- Selling 7,250.00
Supllies expense- Administrative 8,275.00
Utilities expenses 12,500.00
Rent expense 60,000.00
Depreciation expense 22,500.00
Interest expense 25,000.00

The utilities, rent and depreciation expenses are share as 45% administrative and 55% selling.
Tax expense is at 30%.

Required: Prepare a multi-step statement of comprehensive income for the year ended December 31,2018
presenting the different activities of the business.
al revenues to arrive at net income.
ithin the discount period?

andise inventory end)

2/10, n/30.

hat will be the invoice price of the merchandise?

e net sales to be reported if paid within the discount period?

he net sales to be reported if paid beyond the discount period?

for the year 2023, its first year of operation.

ht. Terms 2/10, n/30

tin the dscount period.

to be unsold.
00.00. How much is the cost of goods sold?

3,000.00 and ending inventory of P16,000.00.

ember 31,2018