RISE PREMIER SCHOOL OF ACCOUNTANCY

Batch: PRC May attempt

Total marks: 40
Subject: Introduction to Accounting
Time allowed: 50 Minutes
Teacher: Mr. Naveed Ansari
Series Test-4
Date: 9th May, 2024
Syllabus: Ch # 07 & Ch # 08
Name: _________________________________ Rise ID: ______________

Choose the correct answers.

1. Effii had opening inventory of 800 units at Rs. 15 per unit at 01 January 2019. During the month she made
following purchases and sales transactions:
January 05 Purchased 2,000 units at Rs. 3 per unit
January 15 Sold 1,750 units
January 20 Purchased 1,200 units at Rs. 3.5 per unit
January 25 Sold 700 units
Effii uses periodic weighted average cost method for inventory valuation. What is value of closing inventory
at 31 January 2019?
(a) Rs. 7,538 (b) Rs. 8,603
(c) Rs. 10,947 (d) Rs. 5,425

2. On 1st January 2018, Haroon had opening inventory of 40 units at a cost of Rs. 50 per unit. During July 2018,he has
made following purchases and sales:
January 05 Purchased 60 units at Rs. 40 per unit
January 15 Sold 50 units at Rs. 40 per unit
January 25 Purchased 70 units at Rs. 30 per unit
January 20 Sold 30 units at Rs. 20 per unit

What is the value of inventory at 31 January using the FIFO method?

(a) Rs. 2,500 (b) Rs. 2,100
(c) Rs. 3,000 (d) Rs. 2,900

3. Ahmad had opening inventory of 800 units at Rs. 15 per unit at 01 January 2019. During the month, he
made following purchases and sales transactions:
January 05 Purchased 2,000 units at Rs. 3 per unit
January 15 Sold 1,750 units
January 20 Purchased 1,200 units at Rs. 3.5 per unit
January 25 Sold 700 units
Ahmad uses periodic FIFO method for inventory valuation. What is value of closing inventory at 31 January
2019?
(a) Rs. 7,538 (b) Rs. 8,603
(c) Rs. 10,947 (d) Rs. 5,250

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4. On 1st January 2018, Ahmad had opening inventory of 40 units at a cost of Rs. 50 per unit. During January 2018, he has
made following purchases and sales:
January 05 Purchased 60 units at Rs. 40 per unit
January 15 Sold 50 units at Rs. 40 per unit
January 25 Purchased 70 units at Rs. 30 per unit
January 20 Sold 30 units at Rs. 20 per unit

What is the value of inventory at 31 January using the AVCO method?

(a) Rs. 2,500 (b) Rs. 2,980
(c) Rs. 3,000 (d) Rs. 2,900

5. AP limited sold a generator to EL limited for Rs. 1,040,000. This price is net of Rs. 160,000 special discounts.
AP normally sells items at 20% mark-up and uses perpetual inventory system to record its inventory. Which
of the following entry is correct to update the inventory?
(a) Debit Cost of Sales Rs. 1,500,000 & Credit Inventory Rs. 1,500,000
(b) Debit Cost of Sales Rs. 1,000,000 & Credit Inventory Rs. 1,000,000
(c) Debit Cost of Sales Rs. 1,440,000 & Credit Inventory Rs. 1,440,000
(d) Debit Inventory Rs. 1,500,000 & Credit Cost of sales Rs. 1,500,000

6. Which of the following statements are correct?

(I) Periodic system is suitable to small size items or high value inventory.
(II) Perpetual system is suitable to high value inventories
(a) Only Statement (I) is true (b) Only Statement (II) is true
(c) Both are true (d) Both are not true

7. In Periods of Inflation:
(I) FIFO measures inventory at higher Value
(II) AVCO measures inventory at higher Value
(a) Only Statement (I) is true (b) Only Statement (II) is true
(c) Both are true (d) Both are not true

8. Mr. Adnan Rasheed has some goods costing Rs. 500,000 divided in two categories;
Product A: He purchased these goods costing Rs. 300,000 and expected to sell it for Rs. 320,000 after
incurring cost to sell of Rs. 5,000.
Product B: These goods costing Rs. 200,000. These could be sold only for Rs. 140,000 after incurring cost to
sell of Rs. 15,000. What will be carrying value of Adnan’s goods to be reported in SOFP?
(a) Rs. 440,000 (b) Rs. 400,000
(c) Rs. 450,000 (d) Rs. 425,000

9. A company has budgeted factory overhead of Rs. 80,000 with budgeted Labour hours of Rs. 10,000.
Actual FOH of Rs. 80,800. Actual Labour hours was 11,000. What was the value of under/over absorption?
(a) Rs. 8,000 Over-absorbed (b) Rs. 8,000 under-absorbed
(c) Rs. 7,200 Over-absorbed (d) Rs. 7,200 under-absorbed

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10. Following data was provided by Shakeel Enterprises for the month of June 2022:
Work in process as at 1 June 2022 Rs. 16,300
Work in process as at 30 June 2022 Rs. 18,900
Finished goods inventory as at 1 June 2022 Rs. 30,600
Finished goods inventory as at 30 June 2022 Rs. 27,200
Cost of goods available for sales Rs. 225,000
The manufacturing costs of Shakeel Enterprises for June 2022 was:
(a) Rs. 258,200 (b) Rs. 225,800
(c) Rs. 219,000 (d) Rs. 197,000

11. Which of the following statements are correct?

(I) Selling cost is included in the cost of product
(II) Variable cost per unit remains fixed but varies in total
(III) Fixed cost per unit varies but remains fixed in total
(a) Only Statement (I) is true (b) Only Statement (II) & (III) is true
(c) Only Statement (I) and (III) is true (d) All are true

12. Write down of inventories to net realizable value should be recognized as:
(a) Deferred expenses and transferred to profit and loss account based on inventory movement to which
write down relates.
(b) An expense in the subsequent period in which such write down is warranted
(c) An expense in the period in which write-down occurs.
(d) Current Liabilities

13. In perpetual system, which of the following entries should be made to recognize free samples given in charity?
(a) Debit: Marketing expense & Credit: Inventory
(b) Debit: Inventory & Credit: Cash
(c) Debit: Marketing expense & Credit: Purchases
(d) Debit: Purchases & Credit: Cash

14. Mr. Babloo has purchased goods costing Rs. 9,000. Profit is 25% on Cost. Calculate Selling Price of these goods?
(a) Rs. 12,000 (b) Rs. 11,000
(c) Rs. 11,250 (d) Rs. 10,000

15. Mr. Moto has some goods costing Rs. 12,000. Profit is 20% on Selling Price. Calculate Selling Price of these
goods?
(a) Rs. 10,000 (b) Rs. 16,000
(c) Rs. 13,000 (d) Rs. 15,000

16. Mr. Maaz has some goods having Selling Price of Rs. 24,000. Profit is 20% Markup. Calculate Cost of these
goods?
(a) Rs. 30,000 (b) Rs. 20,000
(c) Rs. 15,000 (d) Rs. 22,000

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17. In a month, the direct production workers worked for 950 hours including 150 hours of general overtime.
The indirect workers worked for 600 hours, which included 200 hours of general overtime.
The direct production workers have a basis rate of Rs. 20 per hour and the indirect have a basic rate of Rs.
12 per hour. All overtime is paid at time plus one-fourth.
What is the amount that will be debited to the production overhead account?
(a) Rs. 19,000 (b) Rs. 19,750
(c) Rs. 12,000 (d) Rs. 8,550

18. Mr. Amin has some goods costing Rs. 32,000. The Company has the policy of 20% Margin. Calculate the
Selling Price of these goods?
(a) Rs. 36,000 (b) Rs. 26,667
(c) Rs. 40,000 (d) Rs. 80,000

19. Which one is correct?

(I) Retail method in the retail industry for measuring inventories of large numbers of rapidly changing
items with similar margins for which it is impracticable to use other costing methods.
(II) Specific identification method is necessary for inventory which is not interchangeable.
(a) Only Statement (I) is true (b) Only Statement (II) is true
(c) Both are true (d) Both are not true

20. What entry should be recorded when actual OH expenditure is incurred

(a) Cost of sale to Production OH (b) Inventory WIP to production OH
(c) Production OH to cash (d) Production OH to cost of sale

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