These questions cover cost of sales, purchases versus expenses, inventory valuation, the effect of inventory errors on profit, and reconciling a stock count. They run from easy to harder. All businesses and figures are fictional, and amounts are in RM.
Work on paper first and set out each calculation in full. Open each answer only after your own attempt. The lessons are in inventory and cost of sales.
Questions
1. (Easy) A shop has opening inventory of RM 3,000, purchases of RM 18,000 and closing inventory of RM 3,600. Find the cost of sales.
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3,000 + 18,000 = 21,000. 21,000 − 3,600 = RM 17,400.
2. (Easy) The same shop has sales of RM 25,000. Find the gross profit.
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25,000 − 17,400 = RM 7,600.
3. (Easy) Pasar Mini Aman pays for (a) 100 packs of rice to resell, RM 900, (b) a chiller cabinet, RM 1,800, and (c) cleaning liquid used in the shop, RM 60. Classify each as purchases, a non-current asset or an expense.
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(a) Purchases, because the rice is for resale. (b) Non-current asset, because the cabinet is used for several years. (c) Expense, because the liquid is used up in the period.
4. (Medium) Kedai Sinar has purchases of RM 52,000, returns outwards of RM 2,500, carriage inwards of RM 1,300, opening inventory of RM 6,800 and closing inventory of RM 7,400. Find the cost of sales.
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Net purchases: 52,000 − 2,500 + 1,300 = 50,800. Goods available: 6,800 + 50,800 = 57,600. Cost of sales: 57,600 − 7,400 = RM 50,200.
5. (Medium) A business has cost of sales of RM 33,500, opening inventory of RM 4,500 and purchases of RM 31,000. Find the closing inventory.
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Goods available: 4,500 + 31,000 = 35,500. Closing inventory: 35,500 − 33,500 = RM 2,000.
6. (Medium) Gerai Ros has no opening inventory. It buys 400 units at RM 9 each and sells 310 units. Find the cost of sales and the closing inventory.
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Cost of sales: 310 × 9 = RM 2,790. Closing inventory: 90 × 9 = RM 810. Check: 2,790 + 810 = 3,600 = 400 × 9.
7. (Medium) A shop’s year-end items are P (cost 700, expected selling price 1,000, selling costs 80), Q (cost 450, price 500, selling costs 70) and R (cost 260, price 240, selling costs 20). Value the inventory at the lower of cost and NRV and state the write-down.
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NRV: P = 1,000 − 80 = 920, Q = 500 − 70 = 430, R = 240 − 20 = 220.
Lower figures: P 700, Q 430, R 220. Inventory: 700 + 430 + 220 = RM 1,350.
Total cost: 700 + 450 + 260 = 1,410. Write-down: 1,410 − 1,350 = RM 60 (Q RM 20 and R RM 40).
8. (Harder) A business reported a net profit of RM 12,400. Its closing inventory was overstated by RM 1,500. State the correct profit and the effect on next year’s profit if nothing is corrected.
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Overstated closing inventory lowers cost of sales, so profit is overstated. Correct profit: 12,400 − 1,500 = RM 10,900.
Next year, opening inventory is RM 1,500 too high, so cost of sales is too high and profit is understated by RM 1,500.
9. (Harder) Kedai Mutiara holds an item costing RM 25 per unit. The records show opening 90 units, purchases 500 and sales 520. The count is 58 units. On 31 December 4 units were sent back to the supplier, but the return was not recorded and those units are not in the count. Find the records quantity, the adjusted records quantity, the unexplained shortage and the closing inventory value.
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Records: 90 + 500 − 520 = 70 units. Adjusted for the 4 units returned: 70 − 4 = 66 units.
Shortage: 66 − 58 = 8 units, at 8 × 25 = RM 200.
Closing inventory is the count: 58 × 25 = RM 1,450. Check: 66 × 25 = 1,650 and 1,650 − 200 = 1,450.
10. (Harder) Closing inventory at the end of year 1 was understated by RM 2,000 and then used as opening inventory in year 2. Reported profit was RM 14,000 for year 1 and RM 18,000 for year 2. Year 2’s closing inventory was correct. Find the correct profit for each year.
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Year 1: closing inventory understated, so profit understated. Correct profit: 14,000 + 2,000 = RM 16,000.
Year 2: opening inventory understated, so cost of sales too low and profit overstated. Correct profit: 18,000 − 2,000 = RM 16,000.
Check: reported total 14,000 + 18,000 = 32,000 and correct total 16,000 + 16,000 = 32,000. The errors cancel over two years.
11. (Harder) A classmate says: “The count is 15 units below the records, so I will increase the count to 15 more to make them agree.” Write a reply of two or three sentences.
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Sample reply: “The count shows what the business really holds, so changing it hides a problem. First check for unrecorded returns or timing items, then separate damaged goods and goods taken by the owner. Whatever stays unexplained is a loss, and the counted figure is used as closing inventory.”
If you got these wrong
Match the type of slip to the lesson that explains it.
| What went wrong | Questions | Lesson |
|---|---|---|
| Layout or arithmetic in cost of sales | 1, 2, 4, 5 | Calculate cost of sales from a stock movement |
| Whole purchases treated as expense, or wrong classification | 3, 6 | Distinguish purchases from expense recognition |
| Comparing totals or mixing up cost and NRV | 7 | Apply a stated valuation principle |
| Wrong direction of effect on profit | 8, 10 | Explain a closing-inventory error’s effect on profit |
| Count forced to match records, or unexplained items misplaced | 9, 11 | Reconcile physical and accounting quantities |
The double-entry and ledger trainer lets you try a fresh scenario for any of these, and the percentage-base explorer helps with selling costs given as percentages. Record each slip in the mistake log and retest queue. To keep going, return to the module overview or read about online one-to-one Accounting tuition.