Quiz 3 PDF

11/9/21, 4:44 AM Content
Question 1 3 out of 3 points

In the process of preparing the financial statements of FFF Company for the year
ended 2021, Management collated the following information related to its inventory:
Date Transaction Qty Unit Cost Selling

Price/Unit
January 1 2,000 P100.00
January 15 Purchases 10,000 P120.00
March 27 Purchases 3,500 P125.00
May 5 Sales 6,000 P150.00
June 23 Sales 3,000 P180.00
September 30 Purchases 5,000 P140.00
November 3 Sales 3,000 P185.00
The Company is applying average basis for the costing of its inventories.
REQUIREMENT:
How much is the cost of the ending inventory under perpetual inventory system?
How much is the cost of goods sold under perpetual inventory system?
If the Company maintains a periodic inventory system, how much is the gross
profit?

Selected Answer: d. P1,086,940.00
Answers: a. P980,000.00
b. P1,137,500.00
c. P1,052,130.00
d. P1,086,940.00

For the purpose of computing the cost of goods sold using the gross profit method,
which of the following should be deducted from sales?
Selected Answer: c. Sales return
Answers: a. Sales allowances and sales discounts
b. Sales return and sales allowances
c. Sales return
d.Sales return, sales allowances and sales discounts
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Which of the following shows the correct measurement of inventories?

Selected a.
Answer: Under the direct method, the beginning and ending inventories are
measured at lower of cost and NRV for the purpose of computing the cost
of goods sold
Answers: a.
Under the direct method, the beginning and ending inventories are
measured at lower of cost and NRV for the purpose of computing the cost
of goods sold
b.
Under the allowance method, the beginning and ending inventories are
measured at NRV for the purpose of computing the CGS
c.
Under the allowance method, the beginning and ending inventories are
measured at lower of cost and NRV for the purpose of computing the
CGS
d.
Under the direct method, the beginning and ending inventories are
measured at cost for the purpose of computing the CGS

Which of the following must be excluded in the items of inventories of the buyer?
Selected b. Goods purchased with buy back agreement
Answer:
Answers: a.Goods delivered to the buyer but under installment sales
b. Goods purchased with buy back agreement
c.Goods sold under FAS, at the port designated by the buyer

d.
Special order goods manufactured to the buyer’s specification, completed
but still in the possession of the selling company

At what amount should the inventories be presented in the statement of financial
position at the reporting date?
Selected Answer: b. Lower of cost and net realizable value
Answers: a. Higher of cost and net realizable value
b. Lower of cost and net realizable value
c. Cost
d. Net realizable value
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Which of the following could not be classified as inventories as described under IAS
2?
Selected a. Unused store supplies
Answer:
Answers: a. Unused store supplies
b.
Goods still in process of production, for sale in the ordinary course of
business
c.
Agricultural produce for sale in the ordinary course of business, after
being harvested from its biological assets
d.Materials and supplies awaiting use in the production process

The following quantities of inventories are included in the count conducted at year
end:
Item Quantity
A 4000 Goods held on consignment
B 3000 Goods sold under installment sales and have
already been delivered to the buyer
C 1000 Goods held by others for storage
The inventory should be reduced by:

(Round off the unit cost to the nearest centavo and the final answer to the nearest
peso. Write the answer without a comma, e.g. 5.25 or 100000)
Selected Answer: 7000
Correct Answer:
Evaluation Method Correct Answer Case Sensitivity
Exact Match 7000

Which of the following should not be part of the cost of the inventories?
Selected a. Storage cost after completion
Answer:
Answers: a. Storage cost after completion
b. Shipping cost from the purchase of goods
c.Salaries of the personnel assigned in the production plant

d.
Depreciation expense of the equipment used in the production of
inventories
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Price/Unit
January 1 2,000 P100.00
May 5 Sales 6,000 P150.00
June 23 Sales 3,000 P180.00
REQUIREMENT:
profit?

If the Company maintains a periodic inventory system, how much is the gross profit?
Selected Answer: d. P509,640.00
Answers: a. P595,000.00
b. P544,440.00
c. P437,500.00
d. P509,640.00

Which of the following is not true under weighted average costing formula?
Selected b.
Answer: Weighted average method requires a computation of new unit cost after
each purchase and subsequent issues are priced at the latest average
unit cost.
Answers: a.Moving average method is appropriate for perpetual system
b.
Weighted average method requires a computation of new unit cost after
each purchase and subsequent issues are priced at the latest average
unit cost.
c. The method considers goods to be undistinguishable
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d.Weighted average method is appropriate for periodic system

CCC maintains perpetual inventory system. In the preparation of its Financial
Statements, the following items were excluded on the inventory balance of CCC
Company as of December 31, 2021:
· Goods sold at P600,000.00, cost of P420,000.00, shipped out to the buyer on

December 31, 2021, FOB Destination and received on January 2, 2021.
· Goods in the hands of salespersons and agents, cost of P250,000.00.
· Goods out on consignment, costing P330,000.00.
· Good purchased amounting to P175,000.00, in transit as of December 31, 2021

with shipping terms FOB Destination. The goods were received on January 3,
2021.
The inventory account should increase by:

(Round off the unit cost to the nearest centavo and the final answer to the nearest
peso. Write the answer without a comma, e.g. 5.25 or 100000)
Correct Answer:
Exact Match P1000000

GGG Company is using weighted average method for the costing of its inventories.
Information related to its inventories, as well as the purchases and sales, are as
follow:

Price/Unit
January 1 2,000 P?
February 1 Purchases 4,000 P52.00
April 3 Sales 5,000 P75
May 3 Purchases 5,000 P54.00
July 30 Sales 8,000 P80.00
At December 31, 2021, the Company’s inventory has a cost of P53,500.00. Its
estimated selling price decreased to P60.00 and selling costs remains at 15%. On
January 1, 2021, the allowance to reduce inventory to NRV had a balance of
P5,000.00.
REQUIREMENT:
How much is the cost of goods sold for the year?
How much is the inventory to be presented in the Statement of Financial Position as
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of December 31, 2020?

Selected Answer: a. P695,500.00
Answers: a. P695,500.00
b. P698,000.00
c. P635,500.00
d. P693,000.00

The average retail method is based on the assumption that the:
Selected b.
Answer: Gross margin percentage applicable to ending inventory and to the good
sold during the period is the same
Answers: a.
Ratio of gross margin to sales is approximately the same each period
b.
Gross margin percentage applicable to ending inventory and to the good
sold during the period is the same
c.
Beginning inventory and the cost of goods sold contain the same
proportion of high cost and low-cost ratio goods
d. Ratio of cost to retail changes at a constant rate

Which of the following is true under the FIFO method?
Selected b.
Answer: In period of inflation, it reports the lowest cost of goods sold and the
highest ending inventory and profit
Answers: a.
In period of inflation, it reports the highest cost of goods sold and the
lowest ending inventory and profit
b.
In period of inflation, it reports the lowest cost of goods sold and the
c.
In period of deflation, it reports the lowest cost of goods sold, ending
inventory and profit
d.
In period of deflation, it reports the lowest cost of goods sold and the
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follow:

Price/Unit
January 1 2,000 P?
July 30 Sales 8,000 P80.00
P5,000.00.
REQUIREMENT:
If the Company is using direct method in writing down its inventory, how much is the
gross profit for the year 2021? Round off the unit cost to the nearest centavo and
the final answer to the nearest peso. Write the answer without a comma. (e.g. 5.25
or 100000)
Correct Answer:
Exact Match 322000

Under what costing formula that the flow of recorded costs matches the physical
flow of goods?
Selected Answer: c. Specific identification method
Answers: a. Moving average method
b. Weighted average method
c. Specific identification method
d. First-in First-out Method
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follow:

Price/Unit
January 1 2,000 P?
July 30 Sales 8,000 P80.00
P5,000.00.
REQUIREMENT:

Answers: a. P51,000.00
b. P108,500.00
c. P113,500.00
d. P53,500.00


Price/Unit
January 1 2,000 P100.00
May 5 Sales 6,000 P150.00
June 23 Sales 3,000 P180.00
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REQUIREMENT:
profit?

Selected Answer: b. P1,450,560.00
Answers: a. P1,400,000.00
b. P1,450,560.00
c. P1,557,500.00
d. P1,485,370.00

The inventory records of HHH Company disclosed the following data for the quarter
ending March 31, 2021:
Beginning inventory- at cost P550,000.00

Beginning inventory – at retail value P825,000.00
Purchases – at cost P1,200,000.00
Purchases – at retail value P1,740,000.00
Purchase returns – at cost P100,000.00
Purchase returns – at retail value P140,000.00
Purchase discounts P60,000.00
Purchase allowances P75,000.00
Sales amounted to P1,200,000, sales return -P50,000.00, sales discount –

P55,000.00, sales allowances -P60,000.00; markdowns – P120,000.00.
REQUIREMENT:
How much is the estimated ending inventory at cost using the FIFO Retail method?
How much is the cost percentage using the Average Retail Method?
Selected Answer: a. 65.73%
Answers: a. 65.73%
b. 68.98%
c. 71.58%
d. 65.20%
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Which of the following relating to inventories is not a required disclosure in the
entity’s financial statements?
Selected d. Volume of inventories purchased during the period
Answer:
Answers: a. Amount of inventories pledged as loan security
b.
Amount of inventories recognized as expense during the period
c. Cost formula used
d. Volume of inventories purchased during the period

Which of the following must be excluded in the items of inventories of the seller?
Selected Answer: a. Goods in transit with terms FOB destination
Answers: a. Goods in transit with terms FOB destination
b. Goods in transit with terms FOB shipping point
c. Goods sold with buyback agreement
d. Goods in the hands of the salesperson

The retail method and gross profit method are:
Selected Answer: c. Inventory estimation methods
Answers: a. Cost formulas
b. Inventory accounting systems
c. Inventory estimation methods
d. Method for recording the effect of write-down

DDD Company is adopting FIFO as its cost formula for its inventory. The following
data relating thereto are as follow:

Price/Unit
January 1 1,000 P10.00

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April 23 Sales 4,000 P15.00

July 3 Sales 8,000 P15.30
At the end of the year, the estimated selling price decreased to P11.00 and the
selling cost is at 10% of the selling price. The normal profit margin is at 15%.
Selling expenses and administrative expenses for the year are P10,000.00 and
P12,000.00, respectively.
REQUIREMENT:
How much is the cost of the ending inventory?
How much is the gross profit, if allowance method is used in recording the write-
down?
Using the allowance method, what amount should be presented as ending inventory
in the statement of financial position as of the reporting date?
How much is the net profit to be reported for the year 2021, using the direct
method?
method?
Selected Answer: b. 33,250.00
Answers: a. 36,650.00
b. 33,250.00
c. 30,100.00
d. 30,500.00

Which of the following is not true regarding inventory accounting system?
Selected c.
Answer: Adjusting entry is necessary to set up ending inventory under the
perpetual inventory system.
Answers: a.
The periodic inventory system is appropriate for relatively low value and
numerous inventory items
b.
A periodic inventory system does not maintain a continuous record of the
physical quantities or costs of inventory on hand.
c.
Adjusting entry is necessary to set up ending inventory under the
perpetual inventory system.
d.
A perpetual system maintains a continuous record of the movement of the
items in its inventory
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Under the FIFO cost formula, the remaining inventory is measured based on:
Selected Answer: c. Most recent cost
Answers: a. Specific cost
b. Average cost
c. Most recent cost
d. Earliest cost


Price/Unit
January 1 1,000 P10.00
REQUIREMENT:
down?
method?

b. P43,000.00
c. P40,000.00
d. P39,600.00
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BBB Company conducted an inventory count of all the items found in its
warehouse. Inventory as of that date amounted to P5,500,000.00 and includes the
following items:
· Goods manufactured according to customer specifications with a cost of

P500,000.00. The goods were already completed but shipped out to the buyer only
on January 1, 2021.
· Goods costing P750,000.00, purchased from a vendor with a buyback
agreement.
· Goods held for others for storage with a cost of P200,000.00.
· Goods customarily manufactured with a cost of P250,000.00. The goods were
already completed but shipped to the buyer on January 3, 2021.
How much is correct inventory as of December 31, 2021?

Selected Answer: c. P4,050,000.00
Answers: a. P4,800,000.00
b. P4,550,000.00
c. P4,050,000.00
d. P3,800,000.00

The amount of any write-down of inventories to net realizable value should be:
Selected b.Recognize as an expense in the period the write-down occurs
Answer:
Answers: a. Presented under other comprehensive income
b.Recognize as an expense in the period the write-down occurs
c.Absorbed by cost of goods sold under the allowance method

d.
Presented as other income or other operating expenses in profit or loss
under the direct method

What is the correct treatment for trade discount?
Selected a. Purchase of goods is recorded net of trade discount.
Answer:
Answers: a. Purchase of goods is recorded net of trade discount.
b. Trade discount is deducted from the invoice price
c. Purchase of goods is recorded gross of trade discount.
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d.
Trade discount may be accounted for using the gross price method, net
price method, and allowance method.

Which of the following is not to be considered in the computation of net realizable
value?
Selected Answer: d. Normal profit margin
Answers: a. Estimated selling price
b. Estimated cost to complete
c. Estimated selling expense
d. Normal profit margin

III Company is engaged in trading sanitary products. The following information
transactions and other information are available for the year ended December 31,
2021:
Inventory, beg – P250,000.00

Purchases, including all in transit – P6,540,000.00
Purchase returns – P120,000.00
Freight-in – P150,000.00
Sales – P8,000,000.00
Sales allowances – P130,000.00
Sales discount – P80,000.00
Sales return – P125,000.00
As of December 31, 2021, purchases costing P90,000 were in transit, FOB Shipping
Point; P65,000 were in the hands of the agents; and P75,000 were out on
consignment.
How much is the ending inventory physically present in the warehouse of the
Company, assuming that the Company sells its products at 25% above cost?
Answers: a. P290,000.00
b. P582,000.00
c. P122,000.00
d. P750,000.00

AAA Company is preparing their financial statements for the year ended December
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31, 2021 and as of the said date, their inventory amounts to P4,250,000.00 based
on physical count. All items found present in the warehouse are included in the
count. The following information are gathered relating to certain inventory
transactions:
· Purchases amounting to P600,000.00 were shipped on December 30, 2021,

FOB Shipping Point, and received by AAA Company on January 2, 2021. The
related sales invoice was received on December 31, 2021 and purchases was
recorded on the same date.
· Goods held on consignment with a cost of P850,000.00. The items are

included in the P4,250,000.00 inventory.
· Goods sold at P500,000.00 were shipped to the customer on December 29,

2021, FOB Destination. The said goods costing P350,000.00 were received by the
buyer on January 5, 2021.
· Goods out on approval to a customer with a cost of P480,000.00. The items

are counted before they were shipped out.
How much is the correct amount of the inventory as of December 31, 2021.
Selected Answer: c. P4,500,000.00
Answers: a. P3,750,000.00
b. P4,350,000.00
c. P4,500,000.00
d. P3,870,000.00

JJJ Company, organized in 2019, is engaged in buying and selling pre-loved
designer bags. During the end of the first semester of 2021, the storage of bags
was caught on fire, damaging all those placed therein at the time of the incident.
The following information transactions and other information are available from
January 1, 2019 to the date of fire.
2021 2020 2019

Net Purchases 1,500,000.00 1,200,000.00 1,800,000.00
Net Sales 2,000,000.00 1,800,000.00 2,400,000.00
Cost of goods sold in 2019 is P1,440,000.00 and the Company was able to maintain
its gross profit percentage from the past years to current.
REQUIREMENT:
How much is the ending inventory as of December 31, 2020? Round off the final
answer to the nearest peso. Write the answer without a comma. (e.g. 5.25 or
100000)
How much is the estimated fire loss at the time of the incident? Round off the final
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100000)
100000)
Correct Answer:
Exact Match 480000


Price/Unit
January 1 1,000 P10.00
REQUIREMENT:
down?
method?
b. P40,000.00
c. P42,750.00
d. P43,000.00
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Which of the following should be part of the cost of inventories?
Selected Answer: d. Storage costs during the production stage
Answers: a. Salary of the sales personnel
b. Rental fee for the office space
c.Abnormal amounts if wasted production resources
d. Storage costs during the production stage


Price/Unit
January 1 1,000 P10.00
REQUIREMENT:
down?
method?
down?
Selected Answer: c. P58,400.00
b. P55,650.00
c. P58,400.00
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d. P58,650.00

Which of the following must be included in the items of inventories of the buyer?
Selected d. Goods in transit with terms FOB shipping point
Answer:
Answers: a. Goods held by the customer on approval
b. Goods in transit with terms FOB destination

c.
Stocked goods manufactured customarily and physically segregated in
the warehouse of the seller
d. Goods in transit with terms FOB shipping point

EEE Company is applying specific identification method as its cost formula for the
costing of its inventory. The following data relating thereto are as follow:
Date Transaction Qty Unit Cost Selling Price/Unit

January 1 50 P2,000.00
March 15 Purchases 300 P2,100.00
July 27 Purchases 400 P2,150.00
September 23 Sales 200 P5,000.00
October 30 Purchases 200 P2,120.00
December 3 Sales 600 P6,000.00
Sales on September 23 was sourced from July 27 purchases whereas sales on

December 3 was sourced from March 15 purchases (300 units), from July 27
purchases (200 units), and from October 30 purchases (100 units).
How much is the cost of the ending inventory as of December 31, 2021? Round off
the final answer to the nearest peso. Write the answer without a comma. (e.g. 5.25
or 100000)
Correct Answer:
Exact Match 312000

JJJ Company, organized in 2019, is engaged in buying and selling pre-loved
designer bags. During the end of the first semester of 2021, the storage of bags
was caught on fire, damaging all those placed therein at the time of the incident.
The following information transactions and other information are available from
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January 1, 2019 to the date of fire.
2021 2020 2019

Net Purchases 1,500,000.00 1,200,000.00 1,800,000.00
Net Sales 2,000,000.00 1,800,000.00 2,400,000.00
Cost of goods sold in 2019 is P1,440,000.00 and the Company was able to maintain
its gross profit percentage from the past years to current.
REQUIREMENT:
100000)
100000)
100000)
Correct Answer:
Exact Match 780000

The inventory records of HHH Company disclosed the following data for the quarter
ending March 31, 2021:
Beginning inventory- at cost P550,000.00

Beginning inventory – at retail value P825,000.00
Purchases – at cost P1,200,000.00
Purchases – at retail value P1,740,000.00
Purchase returns – at cost P100,000.00
Purchase returns – at retail value P140,000.00
Purchase discounts P60,000.00
Purchase allowances P75,000.00
Sales amounted to P1,200,000, sales return -P50,000.00, sales discount –

P55,000.00, sales allowances -P60,000.00; markdowns – P120,000.00.
REQUIREMENT:
Selected Answer: c. 753,060.00
Answers: a. 759,182.00
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b. 834,771.00
c. 753,060.00
d. 828,040.00

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11/9/21, 4:44 AM Content

Question 1 3 out of 3 points

Date Transaction Qty Unit Cost Selling

Question 2 2 out of 2 points

b. Sales return and sales allowances

d.Sales return, sales allowances and sales discounts

Question 3 2 out of 2 points

Which of the following shows the correct measurement of inventories?

Question 4 2 out of 2 points

b. Goods purchased with buy back agreement

c.Goods sold under FAS, at the port designated by the buyer

Question 5 2 out of 2 points

b. Lower of cost and net realizable value

d. Net realizable value

Question 6 2 out of 2 points

Question 7 3 out of 3 points

The inventory should be reduced by:

Question 8 2 out of 2 points

b. Shipping cost from the purchase of goods

c.Salaries of the personnel assigned in the production plant

Question 9 3 out of 3 points

Date Transaction Qty Unit Cost Selling

Question 10 2 out of 2 points

c. The method considers goods to be undistinguishable

d.Weighted average method is appropriate for periodic system

Question 11 0 out of 3 points

· Goods sold at P600,000.00, cost of P420,000.00, shipped out to the buyer on

· Goods in the hands of salespersons and agents, cost of P250,000.00.

· Goods out on consignment, costing P330,000.00.

· Good purchased amounting to P175,000.00, in transit as of December 31, 2021

The inventory account should increase by:

Question 12 3 out of 3 points

Date Transaction Qty Unit Cost Selling

of December 31, 2020?

How much is the cost of goods sold for the year?

Question 13 2 out of 2 points

Question 14 2 out of 2 points

Question 15 0 out of 3 points

Date Transaction Qty Unit Cost Selling

Question 16 2 out of 2 points

b. Weighted average method

c. Specific identification method

d. First-in First-out Method

Question 17 0 out of 3 points

Date Transaction Qty Unit Cost Selling

How much is the inventory to be presented in the Statement of Financial Position as

Question 18 3 out of 3 points

Date Transaction Qty Unit Cost Selling

Question 19 3 out of 3 points

Beginning inventory- at cost P550,000.00

Sales amounted to P1,200,000, sales return -P50,000.00, sales discount –

Question 20 2 out of 2 points

d. Volume of inventories purchased during the period

Question 21 0 out of 2 points

b. Goods in transit with terms FOB shipping point

c. Goods sold with buyback agreement

d. Goods in the hands of the salesperson

Question 22 2 out of 2 points

b. Inventory accounting systems