FATHER SATURNINO URIOS UNIVERSITY

ACCOUNTANCY PROGRAM
ACC 111 – Conceptual Framework and Accounting Standards with Basic Accounting
Semi-Final Examination

Name: Date: Section: Score:

Instructor: Sean Justin F. Espina, C.P.A.

INSTRUCTIONS: Read the questions carefully. Shade the letter of your choice in the answer sheet
provided. For problem solving questions, provide your solutions on the questionnaire. NO solution, NO
point. STRICTLY, NO ERASURES. Pray, before you start answering. God Bless

1. When a customer’s account is collected in full –

a. total assets increases c. total assets remained the same
b. total assets decreases d. none of these

2. Sales returns & allowances and sales discounts are both reduction from sales account. What is the normal
balance of Sales account?
a. debit balance c. debit and credit balance
b. credit balance d. none of these

3. Purchase returns & allowances and Purchase discounts are both reduction from purchase account. What is the
normal balance of the account “Purchases”?
a. debit balance c. debit and credit balance
b. credit balance d. none of these

4. Freight out is recorded in the book of the business-seller-

a. as an expense c. as a liability
b. as an asset d. as cost of sale

5. Freight in is recorded in the business as forming part of –

a. cost of sale c. expense
b. asset d. none of these

6. Purchase discounts and Sales discounts are termed both for –

a. trade discount c. discount term
b. cash discounts d. none of these

7. A physical inventory count is usually conducted –

a. at the end of the year c. at the middle of the year
b. at the beginning of the year d. none of the above

8. A merchandising business which has started its operation, most likely does not have –
a. license to operate c. books of account
b. merchandise inventory, beg d. purchase

9. The following discounts are usually recorded in the journal and posted to the ledger, except:
a. trade discount c. purchase discount
b. cash discount d. discount due to defect of products

10. All descriptions reveal the characteristics the characteristics of a periodic inventory system, except:
a. cost of goods sold is determined at the end of the period
b. purchases are recorded at cost
c. Inventory record is always up-to-date
d. Merchandise inventory account is set-up at the beginning and ending of accounting period

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11. Which of the following will increase the gross profit of the merchandising business?
a. Increase in purchase discount
b. Increase in freight-in
c. Decrease in freight-in
d. Decrease in purchase return

12. Which of the following is to be included in the inventory of the seller?

a. Goods in transit sold under FOB destination
b. Goods in transit sold under FOB shipping point
c. Both a & b
d. None of the choices

13. Which of the following statements is/are false?

I. The income summary account will appear on the post-closing trial balance.
II. All nominal accounts must be closed before the Income Summary account can be closed.
III. To simplify the recording of regular transactions in the next accounting period, all adjusting
journal entries are reversed.
IV. The adjusting entries involving Rent receivable and Salaries Payable could be reversed.
V. An expense account is closed with a debit to the expense account and a credit to income summary.

a. I and II only c. II,III and V only d. none of these

b. I,III and V only d. III, IV and V only

14. Which of the following statements is/are true?

I. Temporary accounts are also known as real accounts
II. Permanent account balances are reduced to zero by closing entries.
III. A reversing entry will include either a debit to a revenue account or a credit to an expense account
IV. Reversing entries are made to correct errors in the accounts.
V. After all closing entries have been entered and posted, the balance of the Income Summary account
will be zero.

a. III, IV and V only c. IV and V only e. II and III only

b. V only d. III and V only

15. Which of the following statements is/are not false?

I. The adjusting entries involving Depreciation Expense-Building and Supplies Expense could be reversed
II. The post-closing trial balance contains asset, liability, withdrawal and capital accounts.
III. The final trial balance is called a post-closing trial balance.
IV. Reversing entries are all dated as at the first day of the new accounting period.
V. A revenue account is closed with a credit to the revenue account and a debit to Income summary.

a. III, IV & V only c. II, IV and V only e. III only

b. II and III only d. III and IV only

16. Each of the following companies is a merchandising entity except a

a. Candy Store b. Car wash c. Furniture Store d. wholesale parts entity

17. Under the perpetual inventory system, in addition to making the entry to record a sale, an entity would
a. debit to Cost of Sale and credit Merchandise Inventory
b. debit to Cost of Sale and credit Purchases
c. debit to Merchandise Inventory and credit Cost of Sale
d. make no additional entry until the end of the period

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18. Under the perpetual inventory system, in addition to making the entry to record a sale return, an entity would
a. debit to Cost of Sale and credit Merchandise Inventory
b. debit to Cost of Sale and credit Purchases
c. debit to Merchandise Inventory and credit Cost of Sale
d. make no additional entry until the end of the period

19. All are methods used in recognizing doubtful accounts expense, except;
a. Aging of Accounts Receivable Method
b. Percentage of Accounts receivable method
c. Percentage of sales method
d. Aging of Sales method

20. When the allowance method of recognizing uncollectible accounts is used, the entry to record the writeoff of a
specific account would
a. Decrease both accounts receivable and the allowance for doubtful accounts
b. Decrease accounts receivable and increase the allowance for doubtful accounts
c. Increase the allowance for doubtful accounts and decrease net income
d. Decrease both accounts receivable and net income

Problem 21-25. The partial trial balance of George Merchandising for the year ended December 31, 2017 is given
below:
Debit Credit
George, Capital 357,000
George, Drawing 50,000
Net Sales 1,857,000
Sales returns & allowances 15,000
Sales discount 8,000
Purchases 950,000
Purchase returns and allowances 5,000
Purchase discounts 3,000
Freight In 6,000
Freight-Out 2,000
Salesmen’s Commission 45,000
Merchandise Inventory:
January 1, 2017 250,000
December 31, 2017 100,000

21. How much is net sales?

a. 1,842,000 b. 1,834,000 c. 1,857,000 d. 1,753,000

22. How much is net purchases?

a. 948,000 b. 950,000 c. 949,500 d. 942,000

23. How much is the cost of sale?

a. 1,008,000 b. 980,000 c. 975,000 d. 1,098,000

24. How much is the gross profit?

a. 950,000 b. 759,000 c. 826,000 d. 736,000

25. How much is the profit?

a. 736,000 b. 689,000 c. 706,000 d. 712,000

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Problem 26. A is using the periodic inventory system. For the year, its total purchases amounted to 250,000. Its
unsold merchandise at the end of the year has a cost of 5,000 which is 20% of its beginning inventory. A’s cost of
sale is
a. 250,000 b. 270,000 c. 251,250 d. 249,000

Problem 27. B’s purchases per purchase invoice amount to 150,000. The purchase discount is 2/10, n/30. Freight
is 500, FOB shipping point freight collect. If payment is made within the discount period, the amount of net
purchases would be
a. 147,000 b.147,500 c. 148,500 d. 150,500

Problem 28. The purchase invoice price shows the amount of 250,000. Freight terms: trade discount is 20%;
3/10, 2/20, n/30; FOB destination, freight collect, 200. If the account is paid 15 days after the invoice date, the net
payment should be
a. 247,300 b. 196,000 c. 242,300 d. 244,800

Problem 29. C purchased merchandise for 5,000 and paid 200 freight, F.O.B. destination, freight collect. The
merchandise was sold at 120% of cost. The gross profit is
a. 1,000 b. 1,040 c. 6,000 d. 6,240

Problem 30. The total purchase is 1,176, net of 2% cash discount. Unsold portion of purchase is 176. The sale is
at mark-up of 10%. The gross profit is
a. 117.60 b. 88.24 c. 115.25 d. 100.00

Problem 31. The term of a 300,00 purchase is 2/30, n/60; FOB, shipping point, freight prepaid, 300. If the
account is paid on the 20th day from the invoice date, the total payment would be
a. 294,000 b. 299,700 c. 294,300 d. 300,300

Problem 32. The following items are taken from the records of D enterprise:
Purchases P10,000 Sales discount 1,000
Purchase returns 100 freight-in 400
Sales 15,000 freight-out 500
No beginning and ending inventory. The gross profit is
a. 3,700 b. 3,200 c. 4,100 d. 3,900

Problem 33. The following data pertain to the two-year operation of F business:
Year 1 Year 2
Sales 200,000 250,000
Purchases 250,000 150,000
Ending inventory 90,000 40,000
F’s gross profit is
Year 1 Year 2
a. 40,000 140,000
b. 40,000 100,000
c. (50,000) 50,000
d. 40,000 50,000

Problem 34. The purchases of G has a list price of 250,000; terms: trade discount 10% and 5%, n/30. To record
the purchase, the journal entry would be
a. Purchases ------------------------- 213,750
Cash --------------------- 213,750
b. Purchases ------------------------- 212,500
Accounts Payable -------- 212,500
c. Purchases ------------------------- 213,750
Accounts Payable -------- 213,750

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 d. Purchases ------------------------ 191,250
Accounts Payable ------- 191,250

Problem 35. L paid P500 freight, FOB shipping point, on its sales on account to Y. the journal entry in both
books of L and Y would be

Books of L Books of Y
a. Freight-out 500 Freight-in 500
Cash 500 Accounts Payable 500

b. Accounts Receivable 500 Freight-in 500

Cash 500 Accounts Receivable 500

c. Accounts Receivable 500 Freight-in 500

Cash 500 Cash 500

d. Accounts receivable 500 Freight-in 500

Cash 500 Accounts Payable 500

Problem 36. M purchased on account, 150,000. Inspection of merchandise revealed that P20,000 worth of
merchandise are defective. M received a credit memo from supplier for 20,000 damage. The journal entry in the
books of M for the credit memo is
a. Cash 20,000
Accounts Payable 20,000
b. Accounts Payable 20,000
Purchase returns 20,000
c. Accounts Payable 20,000
Cash 20,000
d. Accounts payable 20,000
Purchase allowances 20,000

Problem 37. N is selling at list price of 80,000. Terms: trade discount 5%; 1/30; n/60. To record the sales, the
debit would be
a. Cash 76,000
b. Accounts Receivable 80,000
c. Accounts Receivable 75,240
d. Accounts Receivable 76,000

Problem 38. O sold merchandise at list price of 150,000; 10; 1/10; n/30. If the account is collected 8 days from
the invoice date, O will receive
a. 148,500 b. 133,650 c. 135,000 d. 133,500

Problem 39. P sold merchandise at list price of 250,000; 10; 5; n/30. Part of the sale amounting to 10,000 was
returned due to defect. The amount to be collected by P is
a. 205,200 b. 203,750 c. 204,000 d. 195,200

Problem 40. The cost of sale is 250,000. Total purchases amounted to 300,000 which increased the total goods
available for sale to 310,000. The ending inventory is
a. 10,000 b. 70,000 c. 50,000 d. 60,000
Problem 41. The gross profit is 100,000; goods available for sale, 1,100,000; beginning inventory, 100,000;
purchases 1,000,000 and sales, 1,000,000. The ending inventory is
a. 300,000 b. 200,000 c. 100,000 d. none

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Problem 42. The following data pertains to the inventory of Q:
Purchases 1,200,000
Purchase returns 200,000
Purchase discounts 20,000
Freight-in 250,000
Freight-out 300,000
Cost of sale 930,000
Actual inventory per count 275,000
The actual physical count indicates a (an)
a. Shortage of 600,000 c. shortage of 25,000
b. Overage of 25,000 d. Overage of 325,000

Problem 43. H paid freight for 200 on its purchase on account from X, FOB shipping point. The Journal entry in
both books of H and X would be
Books of H Books of X
a. Freight-out 200 Freight-in 200
Cash 200 Accounts Payable 200

b. Freight In 200 No entry

Accounts Receivable 200

c. Freight In 200 No entry

Cash 200

d. Freight In 200 Freight-out 200

Cash 200 Accounts Receivable 200

Problem 44-45. A supplier offers the following discounts: Trade discounts of 10% at list price and another cash
of 5% if paid in full before the due date. The net amount paid by the customer within the discount period is
13,680.

44. How much is the list price?

a. 15,200 b. 14,400 b. 16,000 d. 14,600
45. How much is the invoice price?
a. 15,200 b. 14,440 c. 13,680 d. 13,870

46. The entry to record a sale of 7,500 with terms of 2/10,n/30 would include a
a. credit to accounts receivable for 7,350
b. credit to sales for 7,500
c. debit to sales discountfor 150
d. debit to sales for 7,350

47. The collection of a 4,000 account within the 2% discount period would result in a
a. credit to accounts receivable for 3,920
b. credit to cash 3,920
c. debit to accounts receivable for 3,920
d. debit to sales discounts for 80

48. Under a periodic inventory system, the entry to record a purchase of 60,000, with terms of 2/10.n/30 would
include
a. credit to accounts payable for 60,000
b. credit to purchases for 60,000

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 c. debit to accounts payable for 58,800
d. debit to purchase discount for 1,200

49. Grace Ancheta Company which uses the periodic inventory system, bought merchandise for 8,000, terms
2/10, n/30. If Ancheta returns 2,000 of the goods to the vendor, the entry to record the return should include a
a. credit to purchase returns and allowances of 1,960
b. debit to accounts payable of 2,000
c. debit to discount lost of 40
d. debit to purchase returns and allowances of 1,960

50. Olive Valenzuela Traders purchased merchandise from San Jose Suppliers for 3,600 list price, subject to a
trade discount of 25%. The goods were purchased on terms of 2/10, n/30, FOB destination. Valenzuela paid 100
transportation costs. Valenzuela returned 400 (list price) of the merchandise to San Jose and later paid the amount
due within the discount period. The amount paid is
a. 2,352 b. 2,254 c. 2,246 d. 2,252

Problem 51-55. Miss Granny started his business on January 2017, the following selected data were taken from
the records of Miss Granny Enterprise:
December 31
2017 2018
Merchandise Inventory 140,000 160,000
Sales 400,000 450,000
Sales Discount 3,000 5,000
Purchases 300,000 250,000
Purchase discount 4,000 2,000
Freight In 4,000 3,000
Operating Expenses 60,000 80,000

51. How much is the cost of sale on December 31, 2017?

a. 580,000 b. 160,000 c. 280,000 d. 231,000

52. How much is the gross profit on December 31, 2018?

a. 54,000 b. 271,000 c. 214,000 d. 166,000

53. How much is the goods available for sale on December 31, 2018?
a. 231,000 b. 300,000 c. 440,000 d. 391,000

54. How much is the net income (loss) on December 31, 2017?
a. (243,000) b. 57,000 c. 106,000 d. 177,000

55. How much is the net income (loss) on December 31, 2017?
a. 134,000 b. (26,000) c. 86,000 d. 191,000

Problem 56-60. Capit Commercial, a VAT-registered business, is engaged in buying and selling paste products.
Its transactions for the month of February were as follows:
Feb 1 Bought products from Glue Mfg., a VAT-registered business, at a list price of 50,000.
Terms: trade discount 20%; 5/10, 2/20, n/30, plus VAT. Capit paid 5,000 down payment.
2 Returned 2,000 worth products due to defects.
6 Sold products to Dikit’s school supply, a non-VAT, with a list price of 89,600. Terms:
trade
discount 5%; 2/5, n/30, inclusive of VAT.
7 Dikit returned merchandise with a list price worth 500 due to broken containers.

56. What is the journal entry on February 1 transaction

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 a. Purchases 40,000
Input VAT 4,800
Accounts Payable 39,800
Cash 5,000
b. Purchases 35,714.28
Input VAT 4,285.72
Accounts Payable 35,000
Cash 5,000
c. Purchases 40,000
Accounts Payable 35,000
Cash 5,000
d. Purchases 40,000
Accounts Payable 40,000

57. What is the journal entry on February 2 transaction

a. Accounts Payable 2,000
Purchase returns 1785.71
Input VAT 214.29
b. Accounts Payable 2,240
Purchase returns 2,000
Input VAT 240
c. Accounts Payable 2,000
Purchase returns 2,000
d. Accounts Payable 2,240
Purchases 2,000
Input VAT 240

58. What is the journal entry on February 6 transaction

a. Accounts receivable 85,120
Sales 85,120
b. Accounts receivable 95,334.40
Sales 85,120
Output VAT 10,214.40
c. Accounts Receivable 85,120
Sales 76,000
Output VAT 9,120
d. Accounts receivable 89,600
Sales 80,000
Output VAT 9,600

59. What is the journal entry on February 7 transaction

a. Sales return 424.11
Output VAT 50.89
Accounts Receivable 475
b. Sales return 446.43
Output VAT 53.57
Accounts Receivable 500
c. Sales return 475
Output VAT 57
Accounts Receivable 532
d. Sales return 446.43
Accounts Receivable 446.43

60. What is the VAT payable?

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 a. 4,320 b. 9,069.11 c. 4,800 d. 4,509.11

Problem 61-65. Naïve Company reported the following data at year-end:

Sales 8,000,000
Accounts Receivable 2,000,000
Allowance for doubtful accounts –January 1 100,000
Accounts written off 130,000
Recovery of accounts previously written off 20,000
Methods in estimating doubtful accounts:
1. Percentage of sales - The estimate is 3%
2. Percentage of accounts receivable – The estimate is 8%
3. Aging – The estimate is 200,000.
61. Using percentage of sales method, what is the doubtful account expense?
a. 250,000 b. 230,000 c. 240,000 d. 200,000
62. Using percentage of accounts receivable method, what is the doubtful account expense?
a. 160,000 b. 170,000 c. 150,000 d. 190,000
63. Using aging method, what is the doubtful account expense?
a. 230,000 b. 190,000 c. 210,000 d. 220,000
64. Using percentage of sales method, what is the Net Realizable Value of Accounts Receivable?
a. 1,770,000 b. 1,840,000 c. 1,800,000 d. 1,760,000
65. Using percentage of accounts receivable, what is the adjusting entry for doubtful accounts expense?
a. Doubtful account expense 160,000
Allowance for doubtful accounts 160,000
b. Doubtful account expense 160,000
Accounts receivable 160,000
c. Allowance for doubtful accounts 170,000
Accounts receivable 170,000
d. Doubtful account expense 170,000
Allowance for doubtful account 170,000

66. Which of the following is a correct definition of gross profit?

a. Gross profit = Profit – other expenses
b. Gross profit = Net sales – Net Purchases
c. Gross profit = Net sales – Cost of sale
d. Gross profit = Net purchases + Cost of sale
67. Which of the following items can lead to a difference between values of profit and gross profit?
a. sales return c. transportation in
b. purchase returns d. transportation out
68. What is the meaning of transportation in?
a. the expenses spent on carrying the returned goods from customers
b. the expenses spent on carrying the goods returned to suppliers
c. the expenses spent on carrying the goods sold to customers
d. the expenses spent on carrying the goods purchased from suppliers to the entity
69. Which of the following equations correctly shows the meaning of net sales?
a. Net sales = gross sales – purchases
b. Net sales = gross sales – sales returns
c. Net sales = gross sales – purchase returns
d. Net sales = gross sales – sales returns – transportation in
70. 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

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 Hardships often prepare ordinary people for an extraordinary destiny.

- C.S. Lewis

There is only one thing that makes a dream impossible to achieve: The fear of failure.

- Paulo Coelho

Believe you can and you’re halfway there

- Theodore Roosevelt

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