Question

Use the information provided below, for Snow Plumbing Services, which uses the periodic inventory system, to answer question 7: R
Inventory (1 July 20.7)………………………..................................			150 000
Cash purchases…………………………………………………….... Credit purchases……………………………………………………... Purchases returns…………………………………………………....			15 000 6 000 2 000
Freight inwards……………………………………………………….. Freight outwards……………………………………………………… Settlement discount received……………………………………….. Settlement discount granted…………………………………………			1 200 1 800 1 700 2 500
Inventory (31 July 20.8)…………………….			120 000
7. The cost of sales is … R
(1)	47 500
(2)	17 300
(3)	10 300
(4)	19 000
(5)	18 000

2. Middy Garden Services provides you with the following information at 28 February 20.9.

                          R

Machinery   60 000

Bank        250 000

Vehicles   100 000

What is the net asset value (equity) of Middy Garden Services as at 28 February 20.9?

                  R

(1) 445 000

(2) 450 000

(3) 440 000

(4) 435 000

(5) 405 000

3. Which of the following statements are correct?

(a) When income earned by an entity is more than its expenditure, the entity makes a profit.

(b) When the income earned by an entity is less than its expenditure, the entity makes a profit.

(c) The profit that an entity makes, increases the net worth of the owner.

(d) The loss that an entity makes, decreases the net worth of the owner.

(e) The statement of financial position measures the financial performance of an entity.

(1) a,b,c,d and e.

(2) a,b,c and e.

(3) a,c,d,and e.

(4) a,b,c and d.

(5) a,c,and d.

Answer 1

Question7) Cost of goods sold = opening inventory + Net Purchases made during the year - closing inventory = 150,000 + 15,000+ 6,000 - 2,000 - 120,000 = 49,000

But the same is not given in the option.

3) Net asset value = sum of all the assets = 60,000+250,000+100,000 = 410,000

But options given in the question do not have the answer.

4) when income earned by an entity more than its expenditure the entity it makes a profit. However in the reverse situation it makes a loss. Also profit it increases the net worth of the owner. The statement of financial position measures the financial performance of an entity.

Hence the correct answer is 3