BKAL1013 A181 TUTORIAL 3

TUTORIAL 3

DUE DATE:

PART A: 20 MULTIPLE CHOICE QUESTIONS

1. In a merchandising business, what is the formula to calculate net income?

A. Fees earned – operating expenses = net income

B. Sales – operating expenses = net income
C. Sales – cost of goods sold = net income
D. Sales – cost of goods sold – operating expenses = net income

2. Net income plus operating expenses is equal to

A. cost of merchandise sold
B. cost of merchandise available for sale
C. net sales
D. gross profit

3. Which of the following accounts will NOT appear on the cost of goods sold section on
the Income Statement?
A. Purchases
B. Freight In
C. Sales returns and allowances
D. Merchandise inventory

4. Which of the following is a TRUE statement about inventory systems?

A. Periodic inventory systems require more detailed inventory records
B. Perpetual inventory systems require more detailed inventory records
C A periodic system requires cost of goods sold be determined after each sale
D A perpetual system determines cost of goods sold only at the end of the accounting
period

5. Under a perpetual inventory system, acquisition of merchandise for resale is debited to

the:
A. Merchandise inventory account
B. Purchase account
C. Supplies account
D. Cost of goods sold account
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6. On December 1, Al-Redhwan sold RM3,600 of goods for cash. The cost of the goods sold was
RM2,400. Using a perpetual inventory, the RM2,400 cost of the inventory must be recorded as:

A. Debit Cost of Goods Sold, Credit Inventory

B. Debit Accounts Receivable, Credit Sales
C. Debit Accounts Receivable, Credit Cost of Goods Sold
D. Debit Inventory, Credit Cost of Goods Sold

7. The credit term which allowed a 6% discount if payment is made within 15 days, net amount due
within 30 days is:

A. 15/6, n/15
B. 6/eom, n/15
C. 6/15, n/30
D. 6/6, n/30

8. Which account would the seller debit when the purchaser takes advantage of credit terms within
the discount period?

A. Sales discounts
B. Purchase discounts
C. Purchase returns and allowances
D. Sales returns and allowances

9. Firas sold merchandise on account to Fatin, RM15,000, terms FOB shipping point, n/45. The
cost of the goods sold was RM9,000. Firas paid the RM1,000 shipping costs. In Fatin’s journal
entry, what should be recorded?
RM RM
A. Account Receivable 16,000
Sales 16,000
B. Cost of Goods Sold 16,000
Inventory 15,000
C. Inventory 16,000
Account Payable 16,000
D. Inventory 15,000
Account Payable 15,000

10. The beginning balance in its inventory account is RM1,500 and the ending balance is
RM1,000. Cost of goods sold is RM6,500. What was the amount of inventory purchased
during the year?
A. RM500
B. RM6,000
C. RM7,000
D. RM7,500
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11. Cost of goods sold is equal to

A. the total amount of merchandise purchased during the year
B. the cost of merchandise purchased plus transportation-in costs less ending
inventory
C. the cost of merchandise purchased plus transportation-in costs plus beginning
inventory minus purchase returns and allowances and purchase discounts minus
ending inventory
D. the cost of merchandise purchased plus transportation-in costs plus beginning
inventory minus purchase returns and allowances and purchase discounts

12. If a purchaser using a perpetual system agrees to freight terms of FOB shipping point,
then the:
A. Merchandise inventory account will be increase
B. Merchandise inventory account will not be affected
C. Seller will bear the freight cost
D. Carrier will bear the freight cost

13. A buyer has to pay for a transportation cost on purchased merchandise if the term is:
A. FOB destination
B. COD destination
C. FOB shipping point
D. COD shipping point

14. A credit memorandum is used as documentation for a journal entry that requires a debit
to:
A. Sales and a credit to cash
B. Sales returns and allowances and a credit to accounts receivable
C. Accounts receivable and a credit to a contra-revenue account
D. Cash and a credit to sales returns and allowances

15. Credit memorandum is issued:

A. by buyer to inform the seller of returned merchandise

B. by seller to inform the buyer of returned merchandise
C. by seller to buyer for transportation cost
D. bybuyer to seller for transportation cost
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16. Tara Company made a purchase of merchandise on credit from Nir Company on August
3, for RM6,000, terms 2/10, n/45. On August 10, Tara Company makes the appropriate
payment to Nir Company. The entry on August 10 for Tara Company, assuming Tara
Company uses the perpetual inventory system, is:
A. Accounts payable 6,000
Cash 6,000

B. Accounts payable 5,880

Cash 5,880

C. Accounts payable 6,000

Purchase returns and allowances 120
Cash 5,880

D. Accounts payable 6,000

Merchandise inventory 120
Cash 5,880

17. NikNor Company sells merchandise on account for RM2,000 to Tan Company with
credit terms of 2/10, n/30. Tan Company returns RM300 of merchandise that was
damaged, along with a cheque to settle the account within the discount period. What
entry does NikNor Company make upon receipt of the cheque assuming the returned
merchandise cannot be considered for resale in future?
A. Cash 1,700
Accounts Receivable 1,700

B. Cash 1,666
Sales returns and allowances 334
Accounts receivable 2,000

C. Cash 1,666
Sales returns and allowances 300
Sales discounts 34
Accounts receivables 2,000

D. Cash 1,960
Sales discounts 40
Sales returns and allowances 300
Accounts Receivables 1,700
BKAL1013 A181 TUTORIAL 3

18. In the periodic inventory system, the journal entry to record a purchase of merchandise
on account is:
A. Debit Merchandise Inventory
Credit Cash
B. Debit Merchandise Inventory
Credit Account Payable
C. Debit Purchases
Credit Account Payable
D. Debit Account Receivable
Credit Purchases

19. Nader purchased inventory from Sitra. The shipping costs were RM400 and the terms
of shipment were FOB shipping point. Nader would have the following entry regarding
the shipping charges:
A. Freight expense 400
Cash 400

B. Freight-out 400
Cash 400

C. Merchandise inventory 400

Cash 400

D. There is no entry on Nader’s books for this transaction

20. Which one of the following transactions is recorded with the same entry in a perpetual
and a periodic inventory system?
A. Cash received on account with a discount
B. Payment of freight costs on a purchase
C. Return of merchandise sold
D. Sale of merchandise on account

PART B : STRUCTURED QUESTION

Please refer to page 227: PR4-5

BKAL1013 A181 TUTORIAL 3

TUTORIAL 3 ANSWER SHEET

DUE DATE:

Group: _______

Matric No: __________ Name: __________________________________________

PART A: 20 MULTIPLE CHOICE QUESTIONS

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