Zombie Apologize Company has the following inventory data as of December 31, 2021:

Beginning inventory 100,000

Net Purchases 600,000
Sales 500,000
Sales return 100,000
Sales allowance 50,000
Freight out 10,000
Gross profit rate based on sales 20%
Before the end of the year, the warehouse was destroyed by fire.
The following are additional info regarding the salvaged inventory
a. There is a partially damaged goods with salvage value of P5,000 and cost of P20,000
b. There are undamaged goods with a selling price of P40,000
c. There are fully damaged goods with a cost of P10,000

1. How much is the inventory that was destroyed by fire?

a. 380,000
b. 343,000
c. 200,000
d. 320,000
Net sales 100% 400,000
COGS 80% 320,000
Gross profit 20% 80,000

Beg. Inventory 100,000

Net purchases 600,000
TGAS 700,000
End inventory 380,000
COGS 320,000

End inventory 380,000

a. Partially damaged (5,000)
b. Undamaged goods (32,000) - 40,000 x 80%
c. Fully damaged 0
Loss on Fire 343,000

2. How much is the inventory to be reported after the fire?

a. 380,000
b. 37,000
c. 40,000
d. 50,000
a. Partially damaged 5,000
b. Undamaged goods 32,000 - 40,000 x 80%
Ending inventory 37,000
3. How much is the cost of goods sold?
a. 320,000
b. 280,000
c. 300,000
 d. 310,000
4. How much is the gross profit be reported on December 31,2021?
a. 80,000
b. 40,000
c. 30,000
d. 20,000
Unadjusted Gross profit 80,000
Sales allowance (50,000)
Correct Gross profit 30,000

5. How much is the net income or net loss to be reported during the year 2021?
Gross profit 30,000
Freight out (10,000)
Loss on Fire (343,000)
Net loss (323,000)
a. 70,000 net income
b. 20,000 net income
c. 323,000 net loss
d. 273,000 net loss

6. Kaya Mo Pa Ba Company conducted a physical count and revealed an initial amount of inventory
at P 2,000,000. Additional information are as follows:
a. Parts held out of consignment to another entity, amounting to P120,000
b. Goods in transit as of December 31, bought FOB Shipping point P300,000
c. Goods were in transit from a vendor on December 31, 2021, costing P30,000. The goods were
shipped FOB destination on December 28, 2021.
d. Goods were in transit sold to customers under FOB Shipping point amounting to P40,000. The
goods were shipped on December 30,2021.
e. Goods held on consignment amounting to P200,000
How much is the correct amount of inventory of Kaya Mo Pa Ba Company?
Physical Count 2,000,000
a. Goods out of consignment 120,000
b. Bought FOB Shipping point 300,000
c. No adjustments 0
d. No adjustments 0
e. Goods held on consignment (200,000)
Correct Inventory 2,220,000
a. 2,220,000
b. 2,290,000
c. 2,250,000
d. 2,260,000

7. Which of the following is not included in the inventory of the entity?

a. Purchase price
b. Insurance in transit
c. Storage cost
d. Freight in
 8. Which of the following is part of the inventory of the entity?
a. Goods in trial from
Date Particulars Units Unit Cost Sales in units
the supplier
Jan. 1 Beg. balance 500 P100.00
b. Goods held on
12 Purchased 200 50.00 consignment
15 Sales 600 c. Goods in the hand of
21 Purchased 400 80.00 the entity’s agent
25 Sales 200 d. Goods held as
27 Purchased Return 50 consignee

9. Which of the following is true?

a. Directly attributable cost is not included in the computation of the cost of inventory
b. Insurance, in general, is part of directly attributable cost
c. Storage cost of goods in process is part of directly attributable cost
d. Freight out is part of directly attributable cost

The following are the transaction of T. Liling regarding purchased and sale of inventory
a. The purchased an inventory on cash amounting to P200,000 excluding VAT
b. Purchased an inventory amounting to P336,000 including VAT
c. Sold inventory on account amounting to P100,000 excluding VAT
d. Sold inventory on cash amounting to P60,000 including VAT
The VAT is 12%
10. How much is the total purchased of T. Liling?
a. 200,000
b. 300,000 (336,000 /1.12)
500,000
a. 500,000
b. 536,000
c. 560,000
d. 400,000
11. How much is the total sales of T.Liling?
a. 100,000
b. 53,571.43 (60,000/1.12)
153,571.43
a. 160,000
b. 180,000
c. 150,000
d. 200,000
NUMBER 11 is BONUS

12. Which of the following is false?

a. Irrevocable taxes are part of directly attributable cost
b. Insurance cost while in transit is part of directly attributable cost
c. Revocable taxes are part of directly attributable cost
d. Abnormal amounts are not included in the directly attributable cost

The following are the date of But Company during the year
 13. If the entity uses FIFO – Perpetual. How much is the ending inventory?
Beg. Inventory 500 units
Net Purchases 550 units
TGAS 1,050 units
-end inventory 250 units
COGS 800 units (600+200)
300 units from January 21 purchased
250 x P80 = 20,000
a. 24,000
b. 20,000
c. 25,000
d. 30,000

14. If the entity uses FIFO – Perpetual. How much is the Cost of goods sold?
800 units
500 from beginning inventory P100 per unit
200 from January 12 purchased P50 each
100 from January 21 purchased P80 each
500 x 100 = 50,000
200 x 50 = 10,000
100 x 80 = 8,000
COGS 68,000
a. 70,000
b. 72,000
c. 68,000
d. 66,000

The following are the data of Daysary Enjoyer during January regarding the inventory
Beginning inventory 1,000 units P2,000 each
January 7: Purchase of 2,000 units P1,000 each
9: Sale of inventory 1,500 units
11: Sales Return 500 units
12: Purchase of 1,000 units P3,000 each
15: Purchase return of 300 units
25: Sale of 2,000 units
15. If the entity uses Weighted average method. How much is the ending inventory (round off using
2 decimal places)?
a. 1,154,055
b. 1,200,000
c. 1,160,705
 d. 1,185,604
16. How much is the Cost of goods sold under the weighted average method?
a. 4,945,950
b. 4,900,000
c. 4,939,295
d. 4,914,396

Beg. Inventory 1,000 units

Net Purchases 2,700 units (2,000 + 1,000 – 300)
TGAS 3,700 units
-end inventory 700 units
COGS 3,000 units (1,500 – 500 + 2,000)

Beg. Inventory 1,000 units x 2,000 = 2,000,000

Net Purchases
January 7 2,000 units x 1,000 = 2,000,000
12 1,000 units x 3,000 = 3,000,000
15 (300)units x 3,000 = (900,000)
TGAS 3,700 units = 6,100,000
Weighted average = 6,100,000 / 3,700
= P1,648.65
Ending inventory
700 units x 1,648.65 = 1,154,055
COGS
3,000 x 1,648.65 = 4,945,950

17. Under moving average how much is the ending inventory?

a. 1,260,785
b. 1,250,654
c. 1,235,805
d. 1,240,806

18. Under moving average how much is the cost of goods sold?
a. 4,839,215
b. 4,849,346
c. 4,864,195
d. 4,859,194
Units Cost per unit Total
Beginning 1,000 2,000 2,000,000
January 7 Purchased 2,000 1,000 2,000,000
Balance 3,000 1,333.33 4,000,000
9 Sales (1500) 1,333.33 (2,000,000)
Balance 1,500 1,333.33 2,000,000
11 Sales return 500 1,333.33 666,665
Balance 2,000 1,333.33 2,666,665
12 Purchased 1,000 3,000.00 3,000,000
Balance 3,000 1,888.89 5,666,665
15 Purchased return (300) 3,000.00 (900,000)
Balance 2,700 1,765.43 4,766,665
25 Sales (2,000) 1,765.43 (3,530,860)
Balance 700 1,765.43 1,235,805

The following are the data of Greatest White If Company

Net Sales
2019: 2,000,000
2020: 3,000,000
2021: 1,500,000
Cost of goods sold
2019: 1,000,000
2020: 2,000,000
2021: 1,000,000
19. What is the gross profit rate based on sale for the year 2022?
a. 40%
b. 38.46%
c. 38.89%
d. 38.35%

20. What is the gross profit rate based on cost for the year 2022?
a. 62.5%
b. 61.54%
c. 63%
d. 64.35%
Total Sales for the 3 years: 6,500,000
Total Cogs for the 3 years: 4,000,000
Gross profit for 3 years : 2,500,000
Gross profit base on sale: 2,500,000 / 6,500,000 = 38.46%
Gross profit base on cost: 2,500,000 / 4,000,000 = 62.5%

21. Which of the following is true regarding cost flow of inventory?

a. LIFO is allowed by the standard
b. FIFO perpetual and FIFO periodic will result to a different ending inventory
c. Weighted average and Moving average will result to a different ending inventory
d. All of the choices

22. Which of the following is true?

a. Partially damaged goods are recorded at cost
b. Fully damaged goods are recorded at cost
c. Undamaged goods are recorded at selling price
d. None of the choices

23. Which of the following is false?

a. Gross profit method is based on assumption that gross profit rate remains the same all
throughout the period
b. Gross profit method can only be used If there is a way to compute the gross profit rate
c. In computing the cost of goods sold, only sales return is deducted
 d. In computing the net income, only sales return is deducted

24. If the entity’s gross profit rate based on cost is 30%. What is the entity’s gross profit rate based
on sales?
a. 30%
b. 100%
c. 23.08%
d. 24.10%
30% / 130% = 23.08%

25. Under the perpetual inventory system, in addition to making the entry to record a sale, a company
would.

a. debit Cost of Goods Sold and credit Merchandise Inventory.

b. debit cost of Goods sold and credit Purchases.

c. debit merchandise inventory and credit Cost of Goods Sold.

d. make no additional entry until the end of the period.

26. XYZ Company is a wholesaler of slippers. The FIFO periodic inventory is used. The entity reported the
following activity for inventory of slippers during the month of January:

Units Cost
January 1 Inventory 20,000 36.00
7 Purchase 30,000 37.20
12 Sale 36,000
21 Purchase 48,000 38.00
22 Sale 38,000
29 Purchase 16,000 38.60
What is the ending inventory on January 31?

a. 1,529,600
b. 1,500,800
c. 1,522,880
d. 1,501,600

Beginning Inventory + Purchases – Units Sold = Ending Inventory

20,000+ (30,000+48,000+16,000) – 74,000 = 40,000

Breakdown of 40,000:

From January 1 purchase (24,000 x 38.00) = 912,000

From August 29 purchase (16,000 x 38.60) = 617,600

Total cost of Inventory, August 31 =1,529,600 A.

27. The cost of inventory is the sum of:

a. Cost of purchase and cost of conversion

b. Direct cost, indirect cost and other cost

c. Cost of purchase, cost of conversion and other cost incurred in bringing the inventory to the
present location and condition

d. Cost of conversion and other cost incurred in bringing the inventory to the present location
and condition

28. Inventory encompasses all of the following except:

a. Merchandise purchased by a retailer

b. Land and other property not held for sale

c. Finished goods produced

d. Materials and supplies awaiting use in production process

29. XYZ Company has incurred the following costs during the current year:

Cost of purchases based on vendors’ invoices 5,000,000

Trade discounts on purchased already deducted from vendors’ invoices 500,000
Import duties 400,000
Freight and insurance on purchases 1,000,000
Other handling costs relating to import 100,000
Salaries of accounting department 600,000
Sales commission 300,000
After-sales warranty costs 250,000

What is the total cost of purchase?

a. 5,500,000
b. 5,900,000
c. 6,500,000
d. 6,300,000

Cost of purchases based on vendors’ invoices 5,000,000

Import duties 400,000
Freight and insurance on purchases 1,000,000
Other handling costs relating to import 100,000
6,500,000
30. XYZ Company had the following transactions during December 2021:

Inventory shipped on consignment to ABC Company 1,500,000

Freight paid by XYZ 90,000
Inventory received on consignment from DEF Company 1,200,000
Freight paid by DEF Company 50,000
No sale of consigned goods were made in December 2021

What amount should be included in the inventory on December 31, 2021?

a. 1,200,000
b. 1,250,000
c. 1,500,000
d. 1,590,000

Inventory shipped on consignment to ABC Company 1,500,000

Freight paid by XYZ 90,000
1,590,000

31. XYZ Company recorded the following data relating to raw material during the month of January:

Units
Date Received Cost Issued On Hand
1/1 200 8,000
1/8 4,000 4,000
1/20 12,000 240 16,000

What is the moving average unit cost of the inventory on January 31?

a. 220
b. 224
c. 230
d. 240

Units Unit Cost Total Cost

1/1 8,000 200 1,600,000
1/8 (4,000) 200 (800,000)
4,000 200 800,000
1/20 12,000 240 2,880,000
16,000 230 3,680,000
3,680,000/16,000 = 230

32. In periodic system, the beginning inventory is

a. Net purchases minus cost of good sold
b. Net purchases minus ending inventory
c. Total goods available for sale minus net purchases
d. Total goods available for sale minus cost of good sold

33. XYZ Company provided the following information:

August September
Sales on account 7,200,000 7,360,000
Cash sales 720,000 800,000

All merchandise is marked up to sell at invoice cost plus 20%. Inventory at the beginning of each month
is 30% of that month’s cost of goods sold. What is the cost of goods sold for the month of August?

a. 5,760,000
b. 6,000,000
c. 6,080,000
d. 6,600,000

(7,200,000+720,000 )/1.20 6,600,000

34. Which of the following is not an inventory of the entity

a. Finished goods
b. Goods in process
c. Raw materials
d. Office Supplies

35. Which of the following is not included in the computation of inventory?

a. Insurance in transit
b. Storage cost of goods in process inventory
c. Insurance of inventory
d. All of the choices are included in the inventory