St.

Marys College of Meycauayan

Meycauayan City, Bulacan
Business and Accountancy Program
Accounting 1 Final Examination

Name: _______________________________________________
_______________

Score:

Year and Course: _______________________________________

________________

Date:

Part 1: Merchandising Operations Basic Concept (20 points)

Instruction: True or False. Write True if the statement is correct and False if
the statement is incorrect.
______1. The chart of accounts for a merchandising entity differs from that of
a service entity.
______2. The difference between revenues from sales and cost or sales is
operating income.
______3. The operating cycle is the period of time between accounting
periods.
______4. The bill of lading is a document prepared by the seller detailing the
terms of delivery.
______5. A validated deposit slip indicates that cash and checks where
actually posted.
______6. Discounts offered to the buyer to encourage early payment are
trade discounts.
______7. Cash discounts are called purchases discounts from the buyers
point of view.
______8. The sales discount account is a contra-income account and will
have a debit balance.
______9. A credit term of 2/10, n/30 means that the buyer may deduct 2%
from the invoice if payment is made within 10 days from the end of the
month.
______10. Purchase returns and allowances is a deduction from purchases.
______11. The cost of merchandise purchased during the period is
determined by subtracting from the net purchases the amount of
transportation costs incurred during the period.
______12. The purchase of equipment not for resale should be debited to the
purchases account.
______13. If the seller is to shoulder the cost of delivery, the term is stated as
F.O.B. destination.
______14. The term freight prepaid or collect will dictate who shoulders the
transportation cost.
______15. The two main systems for accounting for merchandise are periodic
and perpetual.
______16. The perpetual inventory system requires recording the cost of each
sale as it occurs.

______17. There is no need for a physical inventory count in the perpetual

inventory system.
______18. The debit balance of the inventory account in the trial balance
under the periodic inventory system is the amount of the inventory at the
end of the current year.
______19. The ending inventory of one period is the beginning inventory of
the next period.
______20. The balance in the merchandise inventory account at the beginning
of the period represents the cost of the merchandise on hand at that time.

Part 2: Merchandise Operations Business Documents and

Terminology (10 points)
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.

Purchase requisition
Purchase order
Credit memorandum
Debit memorandum
FOB Destination
FOB Shipping Point
Invoice
Official Receipt
Periodic Inventory System
Perpetual Inventory System
Purchases Discount
Trade Discounts

Instruction: From the list of terms above, select the one that relates to each
of the following statements:

_____1. This is an authorization made by the buyer to the seller to deliver

the merchandise as detailed in the form.
_____2. It is the discount taken by the buyer for the early payment of an
invoice.
_____3. The document issued by the seller authorizing the return of
merchandise or the grant of an allowance.
_____4.

This document evidences the receipt of cash by the seller.

_____5. This transportation arrangement passes ownership to the goods to

the buyer only when the buyer receives the merchandise.
_____6. Under this inventory system, revenues from sales are recorded
when sales are made, but no attempt is made on the sales date to record
cost of goods sold.
_____7. Under this inventory system, both the sales amount and the cost of
goods sold amount are recorded when each item of merchandise is sold.
_____8. The document prepared by the seller of goods and sent to a buyer
detailing the specifics of a sale.

_____ 9. This discount encourages the buyers to purchase goods because of

markdowns from the list price.
_____10. This is the shipping term if the buyer shoulders the shipping costs.

Part 3: Preparation of Cost of Goods Sold Section of the Income

Statement (10 points)
Merchandise Inventory, 6/30/2014

P310,000

Merchandise Inventory, 7/1/2013

P260,000

Purchases

P830,000

Purchase Returns and Allowances

Purchase Discounts

P 16,600

Transportation In

8,300

P 12, 450

Required: Prepare the cost of goods sold section of the income

statement of Ala-grado Di Lagi Pumapasok Company for the year
ended June 30, 2014.

Part 4: Determining the Beginning Merchandise Inventory (10

points)
Cost of goods sold
Transportation In

P836,000
P 20,000

Merchandise Inventory, 1/31/2014

P180,000

Purchases Discount

P 18,000

Purchase Returns and Allowances

Purchases

9,000

P900,000

Required: Compute the merchandise inventory as at Jan. 1, 2014

Part 4: Determining the Ending Merchandise Inventory (10 points)

On February 18, 2014, a fire destroyed the merchandise inventory of S.
Santiago Company. The following information was available from the
companys accounting office:

Cost of goods sold

Transportation In
Merchandise Inventory, 1/1/2014

P1,260,000
39,600
300,000

Purchase Discounts

26,400

Purchase Returns and Allowances

46,200

Purchases

1,320,000

Required: Compute the value of the lost merchandise.

JFR2014