Question Tag: Cost of Sales

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 10 Marks

FA – Nov 2024 – L1 – Q5a – Inventory Loss and Statement of Profit or Loss

Compute inventory loss due to fire and prepare a statement of profit or loss for a sole trader.

Mawulolo Enterprise is a retail business that prepares its accounts on 31 March each year. The business maintains a standard gross profit margin of 30% on sales.

The following financial information was extracted from its records as at 31 March 2024:

Item GH¢
Inventory at 1 April 2023 254,000
Operating Expenses 378,000
Finance Cost 58,000
Purchases 1,306,000
Sales 1,900,000
Inventory in good standing at 31 March 2024 192,000

On 31 March 2024, a fire outbreak in the warehouse destroyed some of the inventory records and goods.

The tax charge for the year is estimated at GH¢30,000.

Required:

i)Calculate the amount of inventory lost.

ii) Prepare the Statement of Profit or Loss for the year ended 31 March 2024

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2024 – L1 – Q5a – Inventory Loss and Statement of Profit or Loss"

  • 1 Marks

FA – May 2014 – L1 – SA – Q11 – Financial Statements Preparation

Calculates the cost of sales from given gross profit and sales figures.

Aye Limited has a gross profit of 11% and its sales are N150,000. What is the cost of sales?
A. N133,500
B. N142,500
C. N154,500
D. N160,000
E. N165,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2014 – L1 – SA – Q11 – Financial Statements Preparation"

  • 1 Marks

FA – May 2022 – L1 – SA – Q5 – Double-Entry Accounting Principles

Calculate the purchases made by a business given the opening and closing inventories and cost of sales.

If the opening and closing inventories of an entity are ₦34,565 and ₦41,222 respectively, and the cost of sales is ₦160,545, how much are the purchases?

A. ₦119,323
B. ₦153,888
C. ₦167,202
D. ₦201,767
E. ₦236,332

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2022 – L1 – SA – Q5 – Double-Entry Accounting Principles"

  • 1 Marks

FA – May 2021 – L1 – SA – Q19 – Financial Statements Preparation

Determine items deducted from goods available for sale to arrive at cost of sales.

In preparing the profit or loss account of a sole trader, which of the following is deducted from goods available for sale to arrive at cost of sales?

i. Inventory sold
ii. Closing inventory
iii. Lost inventory
iv. Inventory withdrawn by owner

A. I and II
B. II and III
C. II and IV
D. I, II, and III
E. II, III, and IV

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2021 – L1 – SA – Q19 – Financial Statements Preparation"

  • 1 Marks

FA – May 2023 – L1 – SA – Q14 – Recording Financial Transactions

Calculating the cost of sales based on the opening inventory, closing inventory, and mark-up.

14. The following information relates to Phoenix and Co:

N
Opening inventory 125,000
Closing inventory 96,000
Sales 8,913,300

Mark-up is 10%. Determine the cost of sales for the period.

A. N7,002,970

B. N8,050,970

C. N8,074,000

D. N8,103,000

E. N8,132,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2023 – L1 – SA – Q14 – Recording Financial Transactions"

  • 1 Marks

FA – May 2016 – L1 – SA – Q15 – Financial Statements Preparation

A question on how to account for carriage inwards.

Carriage inwards are:
A. Credited to the cost of sales
B. Debited to the cost of sales
C. Credited to the profit or loss
D. Debited to the profit or loss
E. Debited to equity

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2016 – L1 – SA – Q15 – Financial Statements Preparation"

  • 20 Marks

FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis

This question requires preparing a cash flow statement for CL Ltd using IAS 7 and calculating the gross profit margin based on changes in purchase and selling prices.

(a) CL Ltd is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED:

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015:

Description Stated Capital Capital Surplus Income Surplus Total
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 – – 12,900
Comprehensive income – 5,000 7,000 12,000
Dividends paid – – (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH:

Note:
Non-current assets
During the year, the company redesigned its display areas in all of its outlets. The previous displays had cost GHS10 million and had been written down by GHS9 million. There was an unexpected cost of GHS500,000 for the removal and disposal of the old display areas. Also, during the year, the company revalued the carrying amount of its property upwards by GHS5 million, and the accumulated depreciation on these properties of GHS2 million was reset to zero.
All depreciation is charged to operating expenses.

Required:
Prepare a statement of cash flows for CL Ltd for the year ended 31 March 2015 in accordance with IAS 7 – Statement of Cash Flows. (15 marks)

(b) The directors of CL Ltd are concerned at the deterioration in its bank balance and are surprised that the amount of gross profit has not increased for the year ended 31 March 2015. At the beginning of the current accounting period (i.e. on 1 April 2014), the company changed to importing its purchases from a foreign supplier because the trade prices quoted by the new supplier were consistently 10% below those of its previous supplier. However, the new supplier offered a shorter period of credit than the previous supplier (all purchases are on credit). In order to encourage higher sales, CL Ltd increased its credit period to its customers, and some of the cost savings (on trade purchases) were passed on to customers by reducing selling prices on both cash and credit sales by 5% across all products.

Required:
(i) Calculate the gross profit margin that you would have expected CL Ltd to achieve for the year ended 31 March 2015 based on the selling and purchase price changes described by the directors. (2 marks)

(ii) Comment on the directors’ surprise at the unchanged gross profit and suggest what other factors may have affected gross profit for the year ended 31 March 2015.

(3 marks)
(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis"

  • 20 Marks

FA – Nov 2017 – L1 – Q2 – Inventory

Calculation of inventory value, cost of sales, gross profit, net profit, and net assets for Adepa Ltd, using FIFO method and interpretation of IAS 2.

 

You took over from a Trainee Accountant after he had prepared a draft account for the year ended 31 December 2016. A careful examination of the Income Statement revealed the following:

i) There is no figure for closing inventory. However, the December 31, 2015 Statement of Financial Position has a figure of GH¢60,000 as closing inventory value. The closing stock was valued on First In, First Out (FIFO) basis. There were 600 items, valued at GH¢100 per item.

ii) Purchases during the year were:

Date Number of Items Cost per item (GH¢)
01/03/2016 1,600 110
01/06/2016 2,500 120
01/09/2016 3,500 130
01/12/2016 4,000 140

iii) Sales during the year were:

Date Number of Items Price per item (GH¢)
01/02/2016 400 210
01/05/2016 1,000 200
01/08/2016 2,000 215
03/12/2016 4,000 250

iv) Other costs captured in the books of Account during the year 2016 were:

Cost Description Amount (GH¢)
Staff cost 55,000
Rent of premises 47,500
Administrative Expenses 23,500
Marketing cost 44,200
Carriage inwards 5,100
Carriage outwards 6,200
Depreciation 13,500

195,000

Required:
a) Calculate
i) The number of items in inventory at 31/12/2016. (2 marks)
ii) The value of inventory at 31/12/2016 on FIFO basis. (2 marks)

b) Using the revised inventory value calculated in (a) above, calculate
i) Cost of sales for 31/12/2016 (3 marks)
ii) Gross Profit for 31/12/2016 (2 marks)
iii) Net Profit for 31/12/2016 (2 marks)
iv) Net Assets for 31/12/2016 if the figure prepared by the Trainee Accountant was GH¢96,500. (2 marks)

c) State the basic rule set out in IAS 2 – Inventories, which is to be applied to the valuation of inventory. (2 marks)

d) Describe how a business would verify the quantity of inventory held at the year end. (5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2017 – L1 – Q2 – Inventory"

  • 10 Marks

FA – Nov 2024 – L1 – Q5a – Inventory Loss and Statement of Profit or Loss

Compute inventory loss due to fire and prepare a statement of profit or loss for a sole trader.

Mawulolo Enterprise is a retail business that prepares its accounts on 31 March each year. The business maintains a standard gross profit margin of 30% on sales.

The following financial information was extracted from its records as at 31 March 2024:

Item GH¢
Inventory at 1 April 2023 254,000
Operating Expenses 378,000
Finance Cost 58,000
Purchases 1,306,000
Sales 1,900,000
Inventory in good standing at 31 March 2024 192,000

On 31 March 2024, a fire outbreak in the warehouse destroyed some of the inventory records and goods.

The tax charge for the year is estimated at GH¢30,000.

Required:

i)Calculate the amount of inventory lost.

ii) Prepare the Statement of Profit or Loss for the year ended 31 March 2024

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2024 – L1 – Q5a – Inventory Loss and Statement of Profit or Loss"

  • 1 Marks

FA – May 2014 – L1 – SA – Q11 – Financial Statements Preparation

Calculates the cost of sales from given gross profit and sales figures.

Aye Limited has a gross profit of 11% and its sales are N150,000. What is the cost of sales?
A. N133,500
B. N142,500
C. N154,500
D. N160,000
E. N165,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2014 – L1 – SA – Q11 – Financial Statements Preparation"

  • 1 Marks

FA – May 2022 – L1 – SA – Q5 – Double-Entry Accounting Principles

Calculate the purchases made by a business given the opening and closing inventories and cost of sales.

If the opening and closing inventories of an entity are ₦34,565 and ₦41,222 respectively, and the cost of sales is ₦160,545, how much are the purchases?

A. ₦119,323
B. ₦153,888
C. ₦167,202
D. ₦201,767
E. ₦236,332

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2022 – L1 – SA – Q5 – Double-Entry Accounting Principles"

  • 1 Marks

FA – May 2021 – L1 – SA – Q19 – Financial Statements Preparation

Determine items deducted from goods available for sale to arrive at cost of sales.

In preparing the profit or loss account of a sole trader, which of the following is deducted from goods available for sale to arrive at cost of sales?

i. Inventory sold
ii. Closing inventory
iii. Lost inventory
iv. Inventory withdrawn by owner

A. I and II
B. II and III
C. II and IV
D. I, II, and III
E. II, III, and IV

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2021 – L1 – SA – Q19 – Financial Statements Preparation"

  • 1 Marks

FA – May 2023 – L1 – SA – Q14 – Recording Financial Transactions

Calculating the cost of sales based on the opening inventory, closing inventory, and mark-up.

14. The following information relates to Phoenix and Co:

N
Opening inventory 125,000
Closing inventory 96,000
Sales 8,913,300

Mark-up is 10%. Determine the cost of sales for the period.

A. N7,002,970

B. N8,050,970

C. N8,074,000

D. N8,103,000

E. N8,132,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2023 – L1 – SA – Q14 – Recording Financial Transactions"

  • 1 Marks

FA – May 2016 – L1 – SA – Q15 – Financial Statements Preparation

A question on how to account for carriage inwards.

Carriage inwards are:
A. Credited to the cost of sales
B. Debited to the cost of sales
C. Credited to the profit or loss
D. Debited to the profit or loss
E. Debited to equity

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2016 – L1 – SA – Q15 – Financial Statements Preparation"

  • 20 Marks

FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis

This question requires preparing a cash flow statement for CL Ltd using IAS 7 and calculating the gross profit margin based on changes in purchase and selling prices.

(a) CL Ltd is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED:

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015:

Description Stated Capital Capital Surplus Income Surplus Total
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 – – 12,900
Comprehensive income – 5,000 7,000 12,000
Dividends paid – – (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH:

Note:
Non-current assets
During the year, the company redesigned its display areas in all of its outlets. The previous displays had cost GHS10 million and had been written down by GHS9 million. There was an unexpected cost of GHS500,000 for the removal and disposal of the old display areas. Also, during the year, the company revalued the carrying amount of its property upwards by GHS5 million, and the accumulated depreciation on these properties of GHS2 million was reset to zero.
All depreciation is charged to operating expenses.

Required:
Prepare a statement of cash flows for CL Ltd for the year ended 31 March 2015 in accordance with IAS 7 – Statement of Cash Flows. (15 marks)

(b) The directors of CL Ltd are concerned at the deterioration in its bank balance and are surprised that the amount of gross profit has not increased for the year ended 31 March 2015. At the beginning of the current accounting period (i.e. on 1 April 2014), the company changed to importing its purchases from a foreign supplier because the trade prices quoted by the new supplier were consistently 10% below those of its previous supplier. However, the new supplier offered a shorter period of credit than the previous supplier (all purchases are on credit). In order to encourage higher sales, CL Ltd increased its credit period to its customers, and some of the cost savings (on trade purchases) were passed on to customers by reducing selling prices on both cash and credit sales by 5% across all products.

Required:
(i) Calculate the gross profit margin that you would have expected CL Ltd to achieve for the year ended 31 March 2015 based on the selling and purchase price changes described by the directors. (2 marks)

(ii) Comment on the directors’ surprise at the unchanged gross profit and suggest what other factors may have affected gross profit for the year ended 31 March 2015.

(3 marks)
(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis"

  • 20 Marks

FA – Nov 2017 – L1 – Q2 – Inventory

Calculation of inventory value, cost of sales, gross profit, net profit, and net assets for Adepa Ltd, using FIFO method and interpretation of IAS 2.

 

You took over from a Trainee Accountant after he had prepared a draft account for the year ended 31 December 2016. A careful examination of the Income Statement revealed the following:

i) There is no figure for closing inventory. However, the December 31, 2015 Statement of Financial Position has a figure of GH¢60,000 as closing inventory value. The closing stock was valued on First In, First Out (FIFO) basis. There were 600 items, valued at GH¢100 per item.

ii) Purchases during the year were:

Date Number of Items Cost per item (GH¢)
01/03/2016 1,600 110
01/06/2016 2,500 120
01/09/2016 3,500 130
01/12/2016 4,000 140

iii) Sales during the year were:

Date Number of Items Price per item (GH¢)
01/02/2016 400 210
01/05/2016 1,000 200
01/08/2016 2,000 215
03/12/2016 4,000 250

iv) Other costs captured in the books of Account during the year 2016 were:

Cost Description Amount (GH¢)
Staff cost 55,000
Rent of premises 47,500
Administrative Expenses 23,500
Marketing cost 44,200
Carriage inwards 5,100
Carriage outwards 6,200
Depreciation 13,500

195,000

Required:
a) Calculate
i) The number of items in inventory at 31/12/2016. (2 marks)
ii) The value of inventory at 31/12/2016 on FIFO basis. (2 marks)

b) Using the revised inventory value calculated in (a) above, calculate
i) Cost of sales for 31/12/2016 (3 marks)
ii) Gross Profit for 31/12/2016 (2 marks)
iii) Net Profit for 31/12/2016 (2 marks)
iv) Net Assets for 31/12/2016 if the figure prepared by the Trainee Accountant was GH¢96,500. (2 marks)

c) State the basic rule set out in IAS 2 – Inventories, which is to be applied to the valuation of inventory. (2 marks)

d) Describe how a business would verify the quantity of inventory held at the year end. (5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2017 – L1 – Q2 – Inventory"

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan