322 | Basic Financial Accounting and Reporting 2021 Edition by Prof. WIN Ballado SCORE: NAME: PROFESSOR: SECTION: Multiple Choice 1. Which of the following journal entry is correct for the transactions of pop returned by a customer? Account to be debited Account to be credited a. Sales returns Trade payables b. Sales returns Trade receivables C. Purchases returns Trade payables d. Purchases returns Trade receivables 2. Suppose an entity purchases P50.000 goods on credit. The journal entry should boy Account to be debited Account to be credited a. Purchases Cash b. Accounts payable Purchases c. Purchases Accounts payable d. Accounts receivable Accounts payable 3. Which of the following cases show(s) the situation(s) that the list price is higher than the net price after a deduction as stated on the sales invoice? 1. There is a trade discount of 5% given by the seller. 2. There is a cash discount of 5% given by the seller. 3. Some goods are returned to the supplier. a. (1) only b. (2) only c. (1) and (3) only d. (2) and (3) only Based on the following information, answer Questions 4 to 5. Suppose XYZ Trading has completed the following transactions in September 2020 1. sales of goods of P10,000 to Company A on credit 2. purchase of goods of P20,000 from Company B on credit 3, purchase of goods of P25,000 from Company Con credit 4. sales of office-use computer of P10,000 to Company D on creditMerchandising Operations | 323 what is total amount recorded in the sales account for this month? P10,000 P20,000 C. P55,000 P65,000 which of the following shows the correct journal entry for transaction 1? Account to be debited a Accounts Receivable Account to be credited b. Accounts Payable Sales Sales Sales d. Cash Sales Sales Which of the following is not a reason for sales discounts to be offered to the debtors? a. increase the amount paid by the debtors b. improve the liquidity by turning the accounts receivable into cash c encourage earlier settlement of debts by debtors d. reduce the level of bad debts 7. Which of the following statements is correct about credit period? a. If a customer purchases goods within the credit period, a cash discount will be allowed to the customer. If a customer settles the payment within the credit period, a cash discount will be allowed to the customer. c. It refers to the period in which customers must settle their debts due. d. It refers to the period in which customers need to settle one-third of the debts in order to avoid further interests charged. 8. ABC Company sold 10 units of goods with a unit list price of P2,000 on Jan. 1, 2020. Given that the trade discount is 5% and the cash discount is 10%, and that the cash discount period is 10 days and the credit period is 30 days, if the customer settles the debt on Jan. 28, 2020, what is the actual amount he needs to pay? a. P17,100 b. P18,050 C. P19,000 d. P20,000324 | nix Foxencia/ Accounting and Atporting28021 Faltion by Prof. WIN Ballons 4 Which of the following is correct about purchases discounts? a. It refers to the discounts offered by a third party for some reasons. b. It refers to the discounts enjoyed by customers due to bulk purchases. Cit refers to the discounts offered by the supplier to customers due to the cartis, settlement of debts. d. it refers to a reduction in list price. Based on the following information, answer Questions 10 to 11 Suppose UCU Store received the settlement of debt from Lindbergh Soriano by cash Undbergh Soriano purchased goods with a list price of P100,900 on Jan. 1 with a trade discount of 5% Suppose the cash discount period Is 15 days with a cash discount of 4% and Lindbergh Soriano settled the payment on Jan. 10 in full. 10 What is the amount of sales discounts given to Lindbergh Soriano? 3. P1,380 5. P3,800 C P4,000 d. P5,000 11. The correct fournal entry for the settlement of debts owed by Lindbergh Soriano should be: Account(s) to be debited Account(s) to be credited Cath P91, 200 Sales Discounts P3,800 Accounts Receivable P95,000 b. Cash P95,000 Sales Discounts P4,000 Accounts Receivable P100,000 Accounts Receivable P100,000 Sales Discounts P4,000 d. Accounts Receivable P95,000 Cash P96,000 Sales Olstaunts P3,900 Cash P95,000 12, Which of the following statements regarding cash purchases discounts from suppliers isfare correct? 1. They are reductions in the retail prices by the manufacturers, 2. They are revenues to the entity. 3. The cash account is debited when they are received by the entity. 2. (2) only b. (3) only c (1) and (2) only d. [1) and (3) onlyMerchandisely Operations | 325 is which of the following is a correct definition of gross profit? Gross Profit - Profit - Other Expenses b Gross Profit - Net Sales . Net Purchases e Gross Profit - Net Sales - Cost of Goods Sold d. Gross Profit - Net Purchases . Cost of Goods Sold which of the following items can lead to a difference between values of profit and gross profit? sales returns b. purchases returns transportation in d. transportation out 15. What is the meaning of transportation In? the expenses spent on carrying the returned goods from customers b. the expenses spent on carrying the goods returned to suppliers the expenses spent on carrying the goods sold to customers d. the expenses spent on carrying the goods purchased from suppliers to the entity 16. Which of the following equations correctly shows the meaning of net sales? Net sales = Gross sales - Purchases b. Net sales = Gross sales - Sales returns C. Net sales = Gross sales - Purchases returns d. Net sales = Gross sales - Sales returns - Transportation In 17. Which of the following refers to the meaning of transportation out? a. It refers to the expense needed to sell the goods to the customers. b. It refers to the expense needed to transport the goods sold to the customers. C. It refers to the expense incurred in advertising the goods available. d. It refers to the expense regarding the manpower cost needed to produce the products.326 | Basic Financial Accounting and Reporting 2021 Edition by Pro! WIN Ballodo SCORE NAME: PROFESSOR SECTION: Multiple Choice 1 A supplier offers the following discounts Trade discounts of lots at list price any another cash discount of 5%% if paid in full before the due date How much is tor paid if a customer pays before due date at a list price of P16,000? a. P13,680 b P15.520 Ci P14,000 d. P16,000 2 A trade discount is: a shown in the sales journal. b. shown in the purchase journal shown in the general journal. d. not shown anywhere 3. Which account does a merchandiser, but not a service entity, use? a. Sales b. Inventory c Cost of Goods Sold d. All of the above 4 The two main inventory accounting systems are the following a. purchase and sale. b, returns and allowances. c. cash and accrual d. perpetual and periodic 5. The journal entry for the purchase of inventory on account is: Inventory XXX Accounts Payable XXX b Accounts Payable XXX Inventory XXX Inventory XXX Accounts Receivable Inventory XXX Cash XXX XXX