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University of Cebu- Banilad

Senior High School Department


1st Mastery Test

Name: Score:
Subject: Date:
Teacher

I. Multiple Choice. Encircle the letter of the correct answer in each of the given
question.
1) The business derived its income from rendering of services to its clients or customers.
a) Merchandise company c) Sole proprietorship
b) Service concern d) Hybrid company
2) It generates income from buying and selling of merchandise.
a) Merchandising business c) Partnership business
b) Manufacturing business d) Sole proprietorship business
3) Asside from selling activity, what other activity can a merchandising business perform?
a) Manufacturing activity c) Buy and sell
b) Purchasing activity d) None of these
4) A method of inventory keeping where it is characterized by the use of stock card.
a) Periodic inventory c) Calendar inventory
b) Perpetual inventory d) Merchandise inventory
5) Both purchase discounts and sales discounts are terms used for
a) Trade discounts c) Purchased returns
b) Cash discounts d) Sales returns
6) 2/10, N/30 discount term means a 2% discount if paid within 10 days.
a) From the invoice date c) Before the invoice date
b) After the invoice date d) None of these
7) Which of the following is an “adjunct” account to purchases?
a) Freight-in c) Merchandise inventory, beg.
b) Freight-out d) Merchandise inventory, end
8) Which of the following is an expense account?
a) Freight-in c) Merchandise inventory, beg.
b) Freight-out d) Merchandise inventory, end
9) The normal balance of an account Sales is-
a) Debit balance c) In-balance
b) Credit balance d) Out of balance
10) The merchandise left on hand and unsold at the end of the period-
a) Merchandise Inventory, end c) Cost of merchandise sold
b) Merchandise inventory, beg d) Purchased left undelivered
11) When is physical inventory count usually conducted?
a) At the end of any given period c) During mid-season
b) At the start of the year\ d) When there is pilferage
12) A company buys merchandise costing P25,000 and returned P5,000 cost of merchandise. If
the discount term is 2/10, N/30 and the company pays within the discount period, how
much amount it should pay to the seller?
a) P19,600 c) P21,000
b) P20,000 d) P24,500
13) The entry to record the return of goods previously purchased on account due to bad order
will include-
a) A debit to Accounts Payable
b) A credit to Accounts Payable
c) A debit to Purchase Returns and Allowances

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d) A debit to Purchase Discounts
14) R. Espanol Superstore sold merchandise on account for P37,000 and received cash payment
of P35,705 after deducting the sales discount. What was the percent of sales discount?
a) 2% c) 3%
b) 2.5% d) 3.5%
15) Florita Acero Co. Made an account purchases of P30,000 from Marysol Perocho Convenience
Store and was given a 5% purchase discount upon payment. The journal entry to record the
purchase of merchandise was-
Debit Credit
a) Purchasess, P30, 000 Cash, P30,000
b) Accounts Payable, P28,500 Cash, P28,500
c) Purchases, P30,000 Accounts Payable, P30,000
d) Accounts Payable, P30,000 Purchase Discount, P1,500 and Cash, P28,500
16) On July 9, 20A, Leomar Virador Co. Collects its sales on account from Rebecca Dalagan
Grocery Store in the amount of P48,750 after giving a discount term of 2.5/10, N/30. The
journal entry on June 30, 20A to record the sales on account will include –
a) Debit, Accounts Receivable, P48,750
b) Credit, Sales, P48,750
c) Debit, Accounts Receivable, P50,000
d) Credit, Cash, P50,000
17) The cost of merchandise that are sold is referred to as –
a) Merchandise sold c) Cost of sales
b) Merchandise inventory d) Sales
18) A merchandising business which have just started its operation doesn’t have-
a) Business to operate c) Books of accounts
b) Beginning inventory of d) Supplies to be used
merchandise
19) Which of the following is not a component of Cost of Sales?
a) Purchase returns and c) Sales
allowances d) Freight-in
b) Purchase discounts
20) Which of the following is an expense account?
a) Freight-out c) Freight-in
b) Sales discounts d) Purchase discount
21) The excess of Net Sales over cost of sales-
a) Gross profit c) Net profit
b) Gross purchase d) Profit before tax
22) The company made purchases of P30,000 and sales of P45,000 with P5,000 left in
inventory. If the company have no beginning inventory, how much is the cost of sales?
a) P20,000 c) P35,000
b) P25,000 d) 40,000
23) The shipping term wherein the buyer shoulders the freight on shipment on merchandise-
a) F.O.B shipping point c) C.O.D Freight collect
b) F.O.B Destination d) C.O.D Freight prepaid
24) The shipping term wherein the seller shoulders the freight on shipment of merchandise-
a) F.O.B shipping point c) C.O.D Freight collect
b) F.O.B Destination d) C.O.D Freight prepaid
25) Gross profit is arrive at –
a) By adding profit and operating expenses
b) By adding cost of sales and operating expenses
c) By adding cost of sales and sales
d) By deducting operating expenses from cost of sales
26) On December 29, 20A, Manila Sales Depot shipped merchandise to Davao Concrete Products
under the shipping term: FOB shipping point and arrived in the port of Davao on Jan.1, 20B.

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The invoice date was Dec. 15, 20A. Davao Concrete Products pays the freight. Who was the
ownership of merchandise in transit on December 31, 20A?
a) The ownership is retained by the seller
b) The ownership has been transferred to the buyer.
c) The merchandise in in transit
d) Answer not given
27) Cagayan Traders shipped merchandise to Gensan Enterprise on Dec. 27, 20A, under the
shipping term: FOB Destination. The vessel arrived in the port of Gen San City on Dec. 31,
20A but the merchandise was unloaded from the vessel on Jan. 2, 20B. Cagayan Traders
pays the freight. Who has the ownership of the merchandise in transit on Dec. 31, 20A?
a) The ownership has been transferred to the buyer
b) The ownership is retained by the buyer
c) The merchandise is in transit
d) Answer not given.
28) Alice Banta Co’s. Beginning inventory as at January 1,20B was P192, 000 comprising of 800
units. Purchases during the month were:
Quantity Units Cost
Jan.5 500 P250
Jan.7 200 P260
If 980 were sold, how many units were unsold and how much is the cost of these unsold units
assuming FIFO had been used?
Unsold Units Inventory End Value
a) 700 P139,000
b) 520 P132,000
c) 380 P123,000
d) 350 P115,000
29) If Sales was P320,000 and gross profit was P112,000, the rate of gross profit to sales was-
a) 35% c) 30%
b) 25% d) 40%
30) If sales was P200,000 and gross profit rate was 25%, how much was the cost of sales?
a) P50,000 c) P150,000
b) P75,000 d) Not given
31) The following data concerns a certain product of Janice collier Co.
Sales, 150,000 units @P12.50
Purchases, 250,000 units @P9.00
Total Available for Sale – P2,250, 000
Assuming that there is no beginning inventory, how much is inventory at the end of the period?
a) P700,000 c) P900,000
b) P850,000 d) P950,000
32) The following income statement data were taken from the records of Expressway
Department Store, an audit client of Mr. Henry Labasan, CPA.
Purchases:
Cash Purchases P 850,000
Account Purchases P 480,000
Inventories:
Jan. 1 P 980,000
Dec. 31 P 750,000
Freight-out P15,000
Purchase discounts (P8,000)
If purchase returns and allowances for the year was P5,000, how much was the correct cost
of merchandise sold for the period?

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a) P1, 547,000 c) P1, 650,000
b) P1, 635,000 d) P1, 730, 000
33) The following selected data were taken from the records of Lucena Watin Co., a business
ownd by Lascite:
December 31
20A 20B
Merchandise inventory P 140,000 P160,000
Sales 450,000
Sales Discounts 5,000
Purchases 250,000
Freight-in 3,000
Purchase discounts 2,000
Operating Expenses 80,000
How much is gross profit from sales on December 31, 20B?
a) P54,000 c) P214,000
b) P271,000 d) P280,000
34) The following data are given to you. These were taken from the records of M. Jur Co.
Beginning inventory P102,000
Purchases 215,000
Purchase Discounts 3,000
Freight-out 5,000
Sales 220,000
Assuming that the merchandise inventory at the end was P180,000, how much is the cost of goods
sold?
a) P134,000 c) P158,000
b) P152,000 d) P162,000
35) Expense incurred in shipping out the merchandise to a buyer-
a) Freight-out c) Freight in
b) Reduction from sales d) Addition to purchases

II. True/False. Write the letter of the correct answer beside each number.

Statement A Statement B
a. True True
b. False False
c. True False
d. False True
1. S1: Buying and selling are the primary activities of a merchandising business.
S2:Under the merchandising concern, the business can be a buyer at one hand and a seller on
the other hand.
2. S1: Freight in is an adjunct to purchases account.
S2: Freight out refers to transportation expense in buying merchandise from a supplier.
3. S1: Freight in refers to transporation expense in buying merchandise from a supplier.
S2: Freight out is an adjunct to purchases account.
4. S1: Input tax is a tax on purchase while output tax is tax on sales.
S2: Cash discounts are called “purchase discounts” from the point of view of the buyer.
5. S1: Cash discounts are called “sales discounts” fromt he point of view of the seller.
S2: The chart of accounts for merchandising concern is similar to service concern.

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III. Listed below are the real and nominal accounts. On the space provided, place a check
mark as to what section in the worksheet they are to be extended.
Income
Balance Sheet
Statement
Dr. Cr. Dr. Cr.
1. Depreciation Expense
2. Uncollectible Accounts
3. Rent Expense
4. Merchandise Inventory, End
5. Merchandise Inventory, Beg
6. Sales Discounts
7. Freight-out
8. Office Supplies Expense
9. Accumulated Depreciation
10. Interest Income
11. Prepaid rent
12. Purchase returns and
allowances
13. Sales
14. VAT Payable
15. Salaries Expense

IV. Compute the missing items:

Case 1: Mechandise Inventory, beg P 180,000


Purchases ?
Goods Available for sale 370,000
Cost of Sales 220,000
Mechandise Inventory, end 150,000
Puchase disct. 10,000

Case 2: Purchases 350,000


Purchase Returns &
Allowances 15,000
Merchandise Inventory,
beg ?
Freight-in 25,000
Cost of Sales ?
Total Goods Available for
Sale 510,000
Merchandise Inventory,
end 285,000

Merchandise Inventory,
Case 3: beg 220,000
Cost of Sales 270,000
Purchases ?
Total Goods Available for
Sale 750,000
Merchandise Inventory,
end ?
Purchase Disct. 20,000

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Purchase Returns and
Allowances 30,000

Case 4: Net Sales 520,000


Sales Returns and
Allowances 10,000
Sales 560,000
Sales Discts. ?

Case 5: Gross Profit 150,000


Net Sales 350,000
Operating Expenses ?
Profit for the Period 50,000
Cost of Sales ?

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