PRC-1 · Chapter 7 · Question 62 of 100
The owner of a business takes goods costing Rs. 5,000 for personal use. If the business uses a periodic inventory system, what is the correct journal entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Drawings Rs. 5,000; Credit Purchases Rs. 5,000
Explanation
Under a periodic system, the 'Purchases' account holds all acquisitions during the year. When goods are taken for personal use, their cost must be removed from Purchases so they are not included in the Cost of Sales calculation.
More IAS 2: Inventories MCQs
- Q64Which of the following costs must be EXCLUDED from the capitalized cost of inventories?
- Q65What does the term 'Prime Cost' represent in a manufacturing environment?
- Q66Which of the following equations correctly calculates the Cost of Goods Manufactured?
- Q67Which of the following situations describes 'over-absorbed' overheads?
- Q68What is the correct journal entry to adjust for 'over-absorbed' production overheads at the end of the period?