1.
If revenues are $500,000, cost of goods sold is $220,000, and operating expenses are $80,000, the
gross profit is:
a.$500.000
b.$220.000
c.$200.000
d.$280.000
($500,000-$220,000)
2.On 5th Jan company X bought $2,000 goods on credit, 1/10, n/30 (term FOB destination with
transportation cost paid by cash is $10). 6th Jan Company X returned $500 goods to the supplier. 10th
Jan Company X made payment to supplier. The amount of the inventory in company X ‘s acocunting
book:
a.$1,485
b.$ 2,000
c.$ 1,500
d.$1,495
5th Dr Inventory 2,000
Cr AP 2,000
Dr AP 500
Cr Sales Returns and Allowances 500
Dr Sales Returns and Allowances 500
Cr Inventory 500
Dr AP 1,500
Cr Cash 1,485
Cr Purchase discount 15
Dr Dr Cash 1,485
Dr Purchase discount 15
Cr invenory 15
3.On 5th Jan company X bought $2,000 goods on credit, 2/10, n/30 (term FOB shipping point with
transportation cost paid by cash is $10). 6th Jan Company X returned $500 goods to the supplier. 10th
Jan Company X made payment to supplier. The amount of the inventory in company X ‘s acocunting
book:
a.$1,470
b.$1,510
c.$ 1,500
d.$1,480
5th Dr Inventory 2,000
Cr AP 2,000
Dr Transportation in 10
Cr cash 10
Dr Inventory 10
Cr transportation in 10
Dr AP 500
Cr Sales Returns and Allowances 500
Dr Sales Returns and Allowances 500
Cr Inventory 500
Dr AP 1,500
Cr Cash 1470
Cr Purchase discount 40
Dr Purchase discount 40
Cr invenory 40
4.On 4th Jan Company X sold $2,000 goods on credit (original cost $1,100), 2/10, n/30. 6th Customer
sent back to company X $1,000 goods due to the poor quality of goods. 16th Jan customer made
payment by cash. The amount of this payment is:
a.$1,960
b.$2,000
c.$1,000
d.$980
Dr AR 2,000
Cr Revenue 2,000
Dr COGS 1,100
Cr Inveotry 1,10
Dr Sales Purchases and Return 1,000
Cr AP 1,000
5.Which of the following account making an increase to inventory account (in perpetual inventory
system):
a.Purchases
b.Purchases returns and allowances
c.Transportation out
d.Transportation in
6.A credit sale of $700 is made on 1st June, terms 1/10, n/30. A return of $100 is granted on 6th June.
The amount received as payment in full on 9th June is:
a.$700
b.$594
c.$600
d.$693
Ar AR 700
Cr Revenue
Dr Returns
Cr Ar 100
Dr Cash 594
Dr Discount 6
Cr 600
7.In a periodic inventory system, if beginning inventory is $50,000, purchased in the period is $90,000
and ending inventory is $50,000, cost of goods sold is
a.$40,000
b.$50,000
c.$100,000
d.$90,000
COGS = Opening Balance + Purchase – Closing Balance
COGS = Opening Balance + Purchase – Closing Balance
8.On 1st June, Kay Company sold $1,000 units of A to LK Company (original cost was $600 with the term
2/10 and n/30). Payment was made on 9th June. Which amount does LK Company record this
inventory?
a.$980
b.$960
c.$1,000
d.$1,200
