Sale Of Goods On Approval Or Return Basis

15 Questions | Total Attempts: 272

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Sale Of Goods On Approval Or Return Basis - Quiz

Questions and Answers
  • 1. 
    A sent some goods costing Rs. 3,500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of the accounting period i.e. on 31st December, 2005, the remaining goods were neither returned nor were approved by him. The stock on approval will be shown in the balance sheet at Rs.
    • A. 

      2,000.

    • B. 

      2,700.

    • C. 

      2,700 less 25% of 2,700

    • D. 

      3,500

  • 2. 
    A merchant sends out his goods casually to his dealers on approval basis. All such transactions are, however, recorded as actual sales and are passed through the sales book. On 31-12-2005, it was found that 100 articles at a sale price of 200 each sent on approval basis were recorded as actual sales at that price. The sale price was made at cost plus 25%. The amount of stock on approval will be amounting
    • A. 

      Rs.16,000

    • B. 

      Rs. 20,000

    • C. 

      Rs. 15,000

    • D. 

      None of the above.

  • 3. 
    A company sends its cars to dealers on 'sale or return' basis. All such transactions are however treated like actual sales and are passed through the sales day book. Just before the end of the financial year, two cars which had cost Rs.55,000 each have been sent on 'sale or return' and have been debited to customers at Rs.75,000 each, cost of goods lying with the customers will be
    • A. 

      Rs.1,10,000

    • B. 

      Rs. 55,000

    • C. 

      Rs. 75,000

    • D. 

      None of the above

  • 4. 
    Y Ltd. sends out its goods Rs. 1,20,000 to one of its dealer on Sale or Return basis. On st March he received an approval letter for goods of Rs. 80,000. Y Ltd. charge 25% profit on cost. The cost price of the un-approved goods with the dealer will be
    • A. 

      Rs.32,000

    • B. 

      Rs.40,000

    • C. 

      Rs.80,000

    • D. 

      Rs. 64,000

  • 5. 
    A trader has credited certain items of sales on approval aggregating Rs.60,000 to Sales Account. Of these, goods of the value of Rs.16,000 have been returned and taken into stock at cost Rs.8,000 though the record of return was omitted in the accounts. In respect of another parcel of Rs.12,000 (cost being Rs.6,000) the period of approval did not expire on the closing date. Cost of goods lying with customers should be
    • A. 

      Rs. 12,000

    • B. 

      Rs. 54,000.

    • C. 

      Rs. 6,000

    • D. 

      None of the above

  • 6. 
    ABC Ltd. sells goods to its approved^ customers on sale or return basis at a profit of 20% on sales, treating as actual sales. On 26th March, 2006 goods costing Rs.10,000 were sent to Annu Ltd. No confirmation has been received from Annu Ltd. till 31st March, 2006. The amount of stock with customers to be shown as closing stock in the balance sheet of ABC Ltd. as on 31st March, 2006 will be 
    • A. 

      Rs. 12,500

    • B. 

      Rs. 8,000

    • C. 

      Rs. 10,000

    • D. 

      Nil

  • 7. 
    Varun Ltd. sends goods to his customers on Sale or Return recording it as a sale at the time of sending it for approval. During 2006, Varun Ltd. send goods to customers for Rs.1,00,000 on sale or return basis, at cost plus 33.33%. On September 2006. a letter of approval was received from a customer for Rs. 40,000. In this respect, entry will be
    • A. 

      Debtors account debited and sales account credited with Rs.40,000.

    • B. 

      Sales account debited and debtors account credited with Rs.40,000.

    • C. 

      No entry is required for receiving the letter of approval from the customer.

    • D. 

      Entry will be made at the end of the year.

  • 8. 
    Goods of Rs. 600 (sales price) sent on sale on approval basis were included in the sales book. The profit included in the sales was 20% on cost. Stock with the party will increase closing stock by __________
    • A. 

      Rs. 600

    • B. 

      Rs. 500

    • C. 

      Rs. 400

    • D. 

      None of the three

  • 9. 
    Included in the sales were sale of goods of Rs. 5000 on "Sale on approval" basis for which consent of the customer was not received upto Dec. 31st. Goods sent on approval included profits at 25% on cost. Stock on approval will be
    • A. 

      Rs. 4500

    • B. 

      Rs. 5000

    • C. 

      Rs. 4000

    • D. 

      None of the three

  • 10. 
    At what price goods pending approval or return as on the last day of accounting year are valued
    • A. 

      Cost price

    • B. 

      Selling price

    • C. 

      Average price

    • D. 

      Latest price

  • 11. 
    Opening debtors - Rs.50,000 Total sales - Rs.50,000 Cash received from debtors - Rs.30,000 Cash sales • Rs.15,000 Sales Returns - Rs.3,000 Bad debts - Rs.7,000 Bills received from customers - Rs.15,000 Debtors at the end will be
    • A. 

      Rs.40,000

    • B. 

      Rs.30,000

    • C. 

      Rs.20,000

    • D. 

      Rs.50,000

  • 12. 
    Goods sold Rs.25,000 on approval or return basis were included in Sales Book. The profit included in the sales was at 25% on cost. At the year end, closing stock will increase by
    • A. 

      Rs.5,000

    • B. 

      Rs.20,000

    • C. 

      Rs. 15,000

    • D. 

      Rs.45,000

  • 13. 
    Cash sales                                         Rs.70,000 Cash collected from debtors        Rs.2,00,000 Bad debts                                            Rs.7,000 Opening Debtors-                              Rs.30,000 Closing Debtors                                 Rs.16,000 Total sales will be  
    • A. 

      Rs.2,33,000

    • B. 

      Rs.2,63,000

    • C. 

      Rs.2,43,000

    • D. 

      Rs.2,60,000

  • 14. 
    Goods of Rs.30,000 (sales price) sent on approval or return basis were included in the sales book. The profit included in the sales was 20% on cost stock with the party will increase closing stock by
    • A. 

      Rs.25,000

    • B. 

      Rs.30,000

    • C. 

      Rs.20,000

    • D. 

      Rs.24,000

  • 15. 
    If total sales during the year Rs.1,00,000; Cash sales Rs.20,000 and outstanding debtors at the end of the year Rs.30,000 then cash received from debtors during the year will be 
    • A. 

      Rs.70,000

    • B. 

      Rs.50,000

    • C. 

      Rs.1,10,000

    • D. 

      Rs.90,000

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