12A) Chap 12: Inventory Quiz 1

Cost of purchases includes

• Cost price

• Freight & delivery charges

• Import duties

• Salaries paid to workers who processed the goods

• Commission paid to salesmen

Journal entry for Purchase of goods on credit : DR ___ , CR ___.

• Dr Inventory , Cr Trade payable

• Dr Inventory , Cr Cash at bank

• Dr Trade payable , Cr Inventory

Journal entry for Purchase of goods using cheque : DR ___ , CR ___.

• Dr Inventory , Cr Trade payable

• Dr Inventory , Cr Cash at bank

• Dr Trade payable , Cr Inventory

Journal entry for Cash sales, cash was deposited in the

bank: DR Cash at bank , CR Sales revenue

and DR ___ , CR ___.

• Dr Inventory , Cr Cost of sales

• Dr Cost of sales , Cr Inventory

• Dr Cost of sales , Cr Trade receivable

Journal entry for Return of goods purchased on credit : DR ___ , CR ___.

• Dr Inventory , Cr Trade payable

• Dr Inventory , Cr Cash at bank

• Dr Trade payable , Cr Inventory

• Dr Trade receivable , Cr Inventory

Journal entry for Return of goods sold on credit : DR Sales returns , CR Trade receivable

and DR ___ , CR ___.

• Dr Inventory , Cr Cost of sales

• Dr Cost of sales , Cr Inventory

• Dr Cost of sales , Cr Trade receivable

Cost of purchases includes

• Commission paid to salesmen

• Wages for staff who re-package the goods

• Import tax

• Insurance

• Amount on invoice

The inventory costing method used by businesses is ___

• Last in first out (LIFO)

• First in first out (FIFO)

• Weighted average

• Specific identification

Inventory is recorded as ___ in the Balance Sheet.

• Non-current assets

• Current assets

• Current liabilities

Sales revenue, Cost of sales & Sales returns are recorded in the ____ portion of the Income Statement.

• Balance Sheet

• Profit & Loss

• Trading