Question 1

What is the formula for Gross Profit in accounting for merchandising business?

Accepted Answer

Sales less cost of goods sold

Answer

Sales less salaries expenses

Answer

Sales less operating expenses

Answer

Sales less interest expenses

Question 2

What is the formula for Net income in accounting for merchandising business?

Accepted Answer

Sales less cost of goods sold less operating expenses

Answer

Sales less cost of goods sold less non cash expenses

Answer

Sales less operating expenses

Answer

Sales less cost of goods sold

Question 3

When a merchandising business makes a credit sale, which of the following accounts is affected?

Accepted Answer

Accounts Receivable and Revenue

Answer

Inventory and Sales Discounts

Answer

Accounts Payable and Revenue

Answer

Cash and Cost of Goods Sold

Question 4

A merchandising business returns damaged goods to a supplier. The cost of the returned goods was Php2,000. How should this transaction be recorded?

Accepted Answer

Debit Accounts Payable, Credit Inventory

Answer

Debit Cost of Goods Sold, Credit Accounts Payable

Answer

Debit Sales Returns and Allowances, Credit Inventory

Answer

Debit Inventory, Credit Accounts Payable

Question 5

Which inventory system requires a physical count of inventory at the end of the accounting period to determine the ending inventory?

Accepted Answer

Periodic Inventory System

Answer

Perpetual Inventory System

Answer

Just-in-Time Inventory System

Answer

Weighted-Average Inventory System

Question 6

Under which inventory system is the cost of goods sold updated with each sale of inventory?

Accepted Answer

Perpetual Inventory System

Answer

FIFO Inventory System

Answer

Moving Average Inventory System

Answer

Periodic Inventory System

Question 7

What is the primary advantage of using a perpetual inventory system over a periodic inventory system?

Accepted Answer

It provides continuous updates of the inventory and cost of goods sold.

Answer

It eliminates the need for a physical count of inventory.

Answer

It requires less record-keeping.

Answer

It is easier to track inventory on a daily basis.

Question 8

In a perpetual inventory system, how is the cost of goods sold calculated when inventory is sold?

Accepted Answer

The cost of goods sold is calculated automatically each time an item is sold, based on the cost recorded for that item.

Answer

The system calculates the cost of goods sold at the end of the period based on the ending inventory.

Answer

The cost of goods sold is calculated using a periodic formula, based on purchases and sales.

Answer

The cost of goods sold is not recorded in a perpetual system until year-end adjustments are made.

Question 9

How does the periodic inventory system affect the timing of recognizing the cost of goods sold (COGS)?

Accepted Answer

COGS is calculated only at the end of the accounting period, after a physical inventory count is completed.

Answer

COGS is recognized when inventory is purchased, not when it is sold.

Answer

COGS is recognized after every sale, as inventory is updated in real-time.

Answer

COGS is never recognized in the periodic system.

Question 10

A company purchases goods worth Php4,000 and returns Php500 of these goods. In a perpetual inventory system, what journal entry should be made for the returned goods?

Accepted Answer

Debit Accounts Payable, credit Inventory

Answer

Debit Purchases, credit Accounts Payable

Answer

Debit Inventory, credit Purchases

Answer

Debit Purchases, credit Inventory

Question 11

A company has sold inventory for Php3,000 under a perpetual inventory system. The cost of goods sold is Php2,000. Which of the following is the correct journal entry to record the sale?

Accepted Answer

Debit Accounts Receivable, credit Sales Revenue

Answer

Debit Cost of Goods Sold, credit Inventory

Answer

Debit Inventory, credit Accounts Receivable

Answer

Debit Sales Revenue, credit Cost of Goods Sold

Question 12

A company using a periodic inventory system sells inventory worth Php1,500. The cost of goods sold is Php1,000. How should this be recorded?

Accepted Answer

Debit Accounts Receivable and credit Sales Revenue

Answer

Debit Cost of Goods Sold and credit Purchases

Answer

Debit Inventory and credit Cost of Goods Sold

Answer

Debit Purchases and credit Accounts Receivable

Question 13

A company using a perpetual inventory system sells goods worth Php5,000. The cost of goods sold is Php3,500. What is the correct journal entry for the sale?

Accepted Answer

Debit Accounts Receivable Php5,000, credit Sales Revenue Php5,000; Debit Cost of Goods Sold Php3,500, credit Inventory Php3,500

Answer

Debit Accounts Receivable Php5,000, credit Sales Revenue Php5,000

Answer

Debit Sales Revenue Php5,000, credit Accounts Receivable Php5,000

Answer

Debit Cost of Goods Sold Php3,500, credit Accounts Receivable Php3,500

Question 14

A company has two inventory systems in place: a perpetual inventory system for high-value items and a periodic inventory system for low-value items. Which of the following is the primary reason for this difference in systems?

Accepted Answer

a.	The perpetual system is more accurate for high-value items because it provides real-time tracking of inventory.

Answer

The periodic system is more expensive and complex for tracking high-value items.

Answer

The periodic system is preferred for high-value items to avoid excessive record-keeping.

Answer

The perpetual system is used for low-value items because it requires less monitoring.

Question 15

A company using the perpetual inventory system has the following information for the year:
Beginning inventory: Php5,000
Purchases during the year: Php30,000
Sales during the year: Php40,000
Ending inventory: Php10,000
What is the cost of goods sold (COGS) for the year?*

Accepted Answer

Php25,000

Answer

Php40,000

Answer

Php35,000

Answer

Php30,000

Question 16

A company using the periodic inventory system has the following information for the year:
Beginning inventory: Php8,000
Purchases: Php25,000
Ending inventory: Php6,000
What is the cost of goods sold (COGS) for the year?*

Accepted Answer

Php27,000

Answer

Php24,000

Answer

Php20,000

Answer

Php19,000

Question 17

A company using a periodic inventory system purchases Php12,000 in goods. What journal entry is made?

Accepted Answer

Debit Purchases Php12,000, credit Accounts Payable Php12,000

Answer

Debit Cost of Goods Sold Php12,000, credit Accounts Payable Php12,000

Answer

Debit Purchases Php12,000, credit Sales Revenue Php12,000

Answer

Debit Inventory Php12,000, credit Accounts Payable Php12,000

Question 18

Under the periodic inventory system, at the end of the period, the physical inventory count reveals that inventory on hand is Php6,000 less than the balance in the accounting records. What journal entry should the company make?

Accepted Answer

Debit Cost of Goods Sold, credit Inventory

Answer

Debit Cost of Goods Sold, credit Purchases

Answer

Debit Inventory, credit Purchases

Answer

Debit Inventory, credit Cost of Goods Sold

Question 19

What is the primary purpose of the periodic inventory system?

Accepted Answer

To determine the cost of goods sold and ending inventory only at the end of the accounting period.

Answer

To track inventory levels and cost of goods sold in real-time, allowing for continuous monitoring.

Answer

To provide a real-time, accurate reflection of inventory levels after every sale.

Answer

To minimize inventory costs by automatically updating the inventory count.

Question 20

Which of the following is updated automatically in the perpetual inventory system when inventory is purchased?

Accepted Answer

Inventory Account

Answer

Accounts Receivable

Answer

Sales Revenue

Answer

Cost of Goods Sold

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