Quiz No. 4

This is a document prepared by the seller that specifies the amount of sales, and the transportation and payment terms.

• Statement of Account

• Sales Invoice

• Official Receipt

• Bill of Lading

This document contains information about the goods received from a vendor.

• Purchase Request

• Purchase Order

• Credit Memorandum

• Receiving Report

The following refers to Periodic Inventory System, except:

• Uses an occasional physical count to measure the level of inventory and the cost of goods sold

• Merchandise purchases are recorded directly in the inventory account

• Inventory account and the cost of goods sold account are updated at the end of a set period

• Suitable for businesses with low inventory and sales volume.

The following refers to Perpetual Inventory System, except:

• Keeps track of inventory balances continuously.

• Purchases and returns are recorded in separate accounts.

• Ability to more easily identify inventory-related errors.

• Suitable for businesses with high sales volume.

A seller sold goods on account with the terms 2/15, 5/10, n/EOM. Which of the following is true?

• If the buyer pays 14 days after the date of purchase, the buyer can avail of a 5% cash discount.

• If the buyer pays 17 days after the date of purchase, the buyer can avail of a 2% cash discount.

• If the buyer pays 12 days after the date of purchase, the buyer can avail of a 2% cash discount.

• If the buyer pays 17 days after the date of purchase, the buyer can avail of a 5% cash discount.

Which of the following is true?

• Cash discounts are immediately deducted from the price of goods at the time of purchase.

• The price of goods is always recorded at its Gross Invoice Price.

• Trade discounts are recorded in the books at the time of purchase.

• Trade discounts are not deducted from the price of goods at the time of purchase.

Santos Trading purchased merchandise worth P40,000 from DD Company and was given trade discounts of 25% and 20%. How much is the gross invoice price?

• P40,000

• P24,000

• P30,000

• P32,000

Santos Trading purchased merchandise worth P40,000 from DD Company and was given a trade discount of 25%. The journal entry to record the purchase will include:

• Debit to Purchases P30,000

• Debit to Purchases P40,000

• Credit to Trade Discount P10,000

• Credit to Purchase Discount P10,000

Nase Trading sold P50,000 worth of merchandise to SQA Mdse. with terms, 5/10, n/30. Nase gave SQA Mdse. 20% trade discount. The journal entry to record this transaction will include:

• Debit to Accounts Receivable P50,000

• Debit to Accounts Receivable P40,000

• Debit to Accounts Receivable P47,500

• Debit to Accounts Receivable P38,000

Nase Trading sold P30,000 worth of goods to SQA Mdse. with terms 5/15, n/30. SQA returned P5,000 of defective goods to Nase. How much is the remaining balance to be paid by SQA to Nase?

• P30,000

• P25,000

• P23,750

• P28,500