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PART (A):

1.

When a corporation sells merchandise and the terms are FOB shipping point and pays
the shipping costs, the seller would record the transportation costs with the following
entry:
A.
B.
C.
D.

2.

Multiple-step Income Statement:


A.
B.
C.
D.

3.

RM6,860.00
RM6,982.50
RM7,000.00
RM6,985.00

Cost of merchandise sold would be classified as a (an):


A.
B.
C.
D.

6.

RM11,662
RM11,672
RM12,250
RM11,172

Merchandise with an invoice price of RM7,000 is purchased with terms of 2/10, n/30,
FOB shipping point. Transportation costs paid by the buyer were RM125. What is the
cost of the merchandise purchased if payment is made during the discount period?
A.
B.
C.
D.

5.

shows gross profit but not income from operations.


shows both gross profit and income from operations.
shows neither gross profit nor income from operations.
shows income from operations but not gross profit.

A sales invoice included the following information: merchandise price, RM12,000;


transportation, RM500; terms 2/10, n/eom, FOB shipping point. Assuming that a
credit for merchandise returned of RM600 is granted prior to payment, that the
transportation is prepaid by the seller, and that the invoice is paid within the discount
period, what is the amount of cash received by the seller?
A.
B.
C.
D.

4.

debit Cash, credit Accounts Receivable.


debit Accounts Receivable, credit Sales.
debit Accounts Receivable, credit Cash.
debit Merchandise Inventory, credit Accounts Payable.

asset.
expense.
liability.
revenue.

The discount period for credit terms of 1/10, n/30 is:


A. 1 day.
B. 10 days.
C. 20 days.

D. 30 days.
7.

Freight costs incurred by the seller are recorded in the:


A.
B.
C.
D.

8.

The sales discount is based on:


A.
B.
C.
D.

9.

sales account.
cost of merchandise sold account.
transportation in account.
transportation out account.

invoice price plus transportation costs.


invoice price less discount.
invoice price plus transportation costs less returns and allowances.
invoice price less returns and allowances.

In a perpetual inventory system, what accounts are credited when a customer returns
merchandise to the seller?
A.
B.
C.
D.

Sales Returns and Allowances and Accounts Receivable


Accounts Receivable and Cost of Merchandise Sold
Merchandise Inventory and Cost of Merchandise Sold
Sales Returns and Allowances and Merchandise Inventory.

10. Merchandise subject terms 2/10, n/ 30, FOB destination, is sold on account to a
customer for RM15,000. The purchaser returns RM2,000 of merchandise within the
discount period. Assuming payment is made within the discount period, what is the
amount of cash discount allowable?
A.
B.
C.
D.

RM300
RM260
RM400
RM150

11. MyGoodfellas Trading has the following information:


Net sales, RM1,000,000; purchases, RM700,000; Gross profit, RM400,000; Ending
inventory, RM100,000; Sales return, RM10,000; Purchases returns , RM7,000. The
cost of goods sold is:
A.
B.
C.
D.

RM300,000
RM400,000
RM600,000
RM900,000

12. A company makes a purchase of RM15,000 of inventory, subject to credit terms of


2/10, n/30 and returns RM5,000 of inventory prior to payment. What is the amount of
the payment assuming payment is made within the discount period?
A.

RM9,800

B.
C.
D.

RM19,600
RM14,700
RM10,000

13. If merchandise is sold on account to a customer for RM1,000, terms FOB shipping
point, 1/10, n/30, and the seller prepays RM50 in transportation costs, the amount of
the discount for early payment would be:
A.
B.
C.
D.

RM0
RM5.00
RM10.50
None of the above

14. Difference between net sales and the cost of goods sold is called as:
A.
B.
C.
D.

Cash discount
Gross profit
Discount period
FOB destination

15. The income statement in which the total of all expenses is deducted from the total of
all revenues is termed the:
A.
B.
C.
D.

Multiple-step form
Double-step form
Account form
Single-step form

16. Which of the following is a FALSE statement about a multiple-step income


statement?
A.
B.
C.
D.

Operating expenses are often classified as selling and administrative expenses


There may be a section for operating assets
There may be a section for non-operating activities
There is a section for cost of goods sold

17. Credit terms are 3/12, n/30 indicates that the buyer is:
A. Allowed a 30% discount if payment is made within 12 days
B.
Allowed a 12% discount if payment is made within 30 days
C.
Allowed a 3% discount if payment is made within 12 days
D. Allowed a 3% discount if payment is made within 30 days
18. Which of the following account would the seller debit when the purchaser takes
advantage of credit terms within the discount period?
A.
B.
C.
D.

Purchase Discount
Purchase Returns and Allowances
Sales Returns and Allowances
Sales Discount

19.

The cost of merchandise available for sale is equal to the:


A.
Cost of merchandise sold minus the Ending inventory
B.
Sales revenue minus the Cost of merchandise sold
C.
Cost of merchandise sold plus the Ending inventory
D.
Ending inventory plus the Sales revenues

20.

The collection of a RM400 account within the 2 percent discount period would result
in a(n)
A.
increase to Accounts Receivable for RM392.
B.
decrease to Cash for RM392.
C.
increase to Sales Discounts for RM8.
D.
decrease to Accounts Receivable for RM392.

PART (B):

Questions are taken from the main text book @ Rosli,M., Junaidah,H.A., Mudzamir, M. et.
Al (2011). Accounting-A Malaysian Perspective 4E Edition, Cengage, Singapore.

1. EX 4-8: Page no.223.


2. PR 4-5: Page no. 227.

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