The most important reason for studying accounting is that
Answer
(A)
the information provided by accounting is useful in making decision
2
In preparing accounting records, the owner of a business and the business are treated as
Answer
(C)
separate legal entities
3
Creditors use Accounting information for the purpose of
Answer
(D)
assessing a company's liquidity
4
The instrument that are generated when firms enter into business transactions with others are called
Answer
(C)
source documents
5
The document that is used to acknowledge the acceptance of the return of goods by the seller from the buyer is known as
Answer
(A)
credit note
6
The effect of the payment of liability is that it
Answer
(D)
decrease both assets and liabilities
7
Books of original entry are used for
Answer
(A)
recording business transactions
8
The term 'posting' in Accounting refers to
Answer
(D)
transferring entries to the ledger from the journal
9
Erroneous rearrangement of financial figures such as writing N624 as N 264 is called
Answer
(A)
transposition
10
Which of the following demonstrates the imprest system?
Answer
(C)
Float → expenses paid→ cash from bank → float
11
When the sum of money appears on the credit side of the cash book, but not on the debit side of the bank statement, the sum is regarded as
Answer
(D)
unpresented cheques
12
An examination of the cash book on 3rd August 1993 showed a different balance from the bank statement of 31st July, 1993 which read N722. Uncredited cheques were Bimpe N40; Wale N60 while unpresented cheques were; Usman N20, Kalu N32 and Musa N70. What is the cash book balance after the reconciliation?
Answer
(A)
N700
13
On the 30/5/93 Tolu & Co. paid 2 years rent of N50,000 which was debited to the rent account.
At 31/12/93, what portion of that amount was prepaid?
Answer
(A)
N14,583
14
On the 30/5/93 Tolu & Co. paid 2 years rent of N50,000 which was debited to the rent account.
The adjustment needed as at 31st December 1993 is?
Answer
(C)
debit rent account and credit prepayment account
15
The receipt of cash from a customer who bought goods with N800 list price, 25% trade discount and 2/10, n/30 terms would, if paid within the discount period, amount to
Answer
(B)
N588
16
At the end of a financial period, the trading profit and loss account of a company showed a profit of N120,000. It was however discovered that revenue of N12,000 was recorded as expenses while expenses of N4,000 had been recorded as revenue. What should be the correct profit for the period?
Answer
(B)
N128,000
17
Given:
Net profit-----------------------N25,000
Cost of sale---------------------N25,000
Sales----------------------------N85,000
Determine the total expenses.
Answer
(B)
N35,000
18
Given: capital N13,000; office machinery, N9,000; creditors N900, stock of goods N1,550; debtors, N275; cash at bank, N5,075 and loan from Jumbo, N2,000. What is the balance sheet total?
Answer
(D)
N15,900
19
The records of wages due but not yet paid is an example of an adjustment for
Answer
(B)
recognizing accrued expenses
20
The process of allocating the cost of an intangible assets over its useful life is known as
Answer
(A)
depreciation
21
The principle use of control accounts is to
Answer
(A)
localize error within the ledger
22
In the absence of a sales day book or sales account the credit for sales can be computed from
Answer
(B)
debtors control account
23
which of the following conditions best represents the net effect of discount allowed on credit sales on the accounts of the business?
Answer
(A)
decrease in the closing balance of sales ledger control accout
24
The total of the creditors at the beginning of the year was N4,600 and at the end of the year N5,250. During the year, N26,500 was paid to suppliers and N130 was received in discounts from these suppliers. The purchases for the year would be
Answer
(A)
N26,630
25
Given:
Capital at the beginning...............N20 000
Drawings...............................N3 000
Capital................................N30 000
New capital introduced.................N8 000
What is the profit for the period?
Answer
(B)
N5 000
26
Which of the following stock valuation methods is suitable under inflationary conditions?
Answer
(A)
FIFO
27
The understatement of closing value of work-in-process would have the effect of?
Answer
(C)
overstating cost of goods manufactured
28
Emeka Manufacturing Company (Extract) Manufacturing Account.
Direct material.....................N5 000
Direct labour.......................N4 500
Direct expenses.....................N3 000
Factory overhead....................N2 500
Selling distribution................N1 500
Calculating the production cost?
Answer
(B)
N15 000
29
Adamu, Babaji and Chukwu are in partnership and they share profit and losses on ratio 3:2:1. Their respective capitals are N20 000, N15 000 and N5 000 on which on which they are entitle to interest at 5% per annum. The profit for the year before charging interest on capital amounted to N5 500.
Calculate the profit for Adamu?
Answer
(B)
N1 000
30
Faruk and Osawe are in partnership sharing profits and losses in the ratio of 3:7. Faruk is to receive a salary of N9 000. In one accounting period, the business recorded a loss of N1 500 (before deduction of Faruk's salary). The appropriate distribution of the net loss would be?
Answer
(D)
Faruk, (N450); Osawe, (N1 050)
31
Share premium can be used to?
i. write off discount on shares
ii. give loans to directors
iii.pay dividends
iv. pay company's formation expenses.
Answer
(B)
i and iii only
32
Alabede (NIG) limited issued 50 000 ordinary shares of N1 each at a market value of N2.50 each. the share premium is?
Answer
(C)
N50 000
33
What is the balance of the bank account shown above?
Answer
(C)
N 59 410 credit
34
In analyzing incomplete records, which of the following should be investigated?
Answer
(C)
the nature of trading activities and the basis on which goods are sold
35
Given: N
Direct material - 10 000
Direct labour - 5000
Direct expenses - 2000
Factory overhead - 4000
What is the prime cost?
Answer
(B)
N 17 000
36
The difference between a trading account and a manufacturing account is that while the manufacturing account
Answer
(C)
is concerned with the cost of production, the trading account is not
37
An income and expenditure account is a summary of
Answer
(B)
revenue income and expenditure during a period
38
Additional information :
1: 1: 93 31 : 12 : 93 N N
Subscription in arrears 300 450
Furniture 7000
Subscription received
in advance 500 400
Rate owing 50 60
Subscription relating to the accounting year 1993 in the income and expenditure account is
Answer
(C)
N14 300
39
Accumulated fund on 1st January 1993 is
Answer
(D)
N7 520
40
On partnership dissolution, if a partner's capital account has a debit balance and the partnr is insolvent, the deficiency will, in accordance with the decision of the case of Garner v Murray, be
Answer
(A)
borne by all the partners
41
A company has 5% debentures worth N500 000 ordinary share capital N 2 000 000, and preference shares N1500 000. if the company made a profit of N 1 000 000, the debenture interest would amount to
Answer
(D)
N 25 000
42
A dividend of 10% in a company on 500 000 ordinary shares of N 1 nominal value has been declared, How much will a shareholder receive if he has 200 shares?
Answer
(D)
N 20
43
What is the working capital?
Answer
(B)
N 11 000
44
The acid test ratio in the company is
Answer
(B)
1:2
45
If goods are invoiced to the branch at cost and the invoice par value is N 2 000 with 5%discount rate, can remitted to the head office is
