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Question 1 Report
A statement in a double entry system in which are recorded all the transactions of one specific class, which takes place during the period is called
Answer Details
The statement in a double entry system that records all the transactions of one specific class during a period is called a ledger. A ledger is a book or a collection of accounts in which a business records its financial transactions. It contains all the financial information related to a specific account, such as sales, purchases, expenses, and revenues. In a double entry system, every transaction affects at least two accounts, one being debited and the other credited. These debits and credits are recorded in the ledger in separate columns, which allows for the calculation of the account balance at any given time. For example, a business might have a ledger for its sales transactions, in which all the sales made during a particular period are recorded. Each sale is recorded in the ledger as a debit to the customer's account and a credit to the sales account. At the end of the period, the balance in the sales account represents the total amount of sales made during that period. Overall, the ledger is an important tool in accounting as it provides a detailed record of all financial transactions, allowing businesses to monitor their financial performance and make informed decisions.
Question 3 Report
Use the information to answer this question
Receipts and Payment Account (Extract)
N
Bal b/f 3650 Insurance 900
Subscription (99) 7500 Rate 11,700
(2000) 1000 Bal c/d 8,050
Fees 8500
20,650 20,650
The following information were given:
Rates owing Insurance prepaid Subscription in arrears |
1/199 3,600 50 700 |
31/12/99 2000 1000 600 |
The figure ₦1000 represent what in the balance sheet.
Answer Details
Question 4 Report
The method of stock valuation in which the issue price is obtained by dividing the value of stock in hand by unit of stock in hand is
Answer Details
The method of stock valuation in which the issue price is obtained by dividing the value of stock in hand by unit of stock in hand is called Weighted Average Price (WAP). WAP is a method of determining the average cost of a stock that a company holds in its inventory. It takes into account the cost of each unit of stock and the number of units held. The total cost of the stock is then divided by the total number of units to determine the average cost per unit. This average cost per unit is then used as the value of the stock for accounting purposes. The WAP method is useful for companies that purchase stocks at different times and different prices, as it provides a more accurate reflection of the value of the stock. It is also useful for companies that sell stock frequently, as it provides a more accurate reflection of the cost of the stock and helps to ensure that the company is not overcharging or undercharging for the stock.
Question 5 Report
Use the information below to answer this question.
Ojo, Sam and Ade are in partnership sharing profit in the ratio 4 : 3 : 1 respectively.
Extract from their books for the year ended are
Interest on drawings and capital is allowed 5% respectively and profit for the year amounted to ₦4,950
Sam's share of profit is
Answer Details
Question 6 Report
Every economic unit, regardless of its legal form of existence, is treated as a separate entity from parties having economic interest is
Answer Details
The entity concept is a fundamental principle of accounting that assumes that every economic unit, regardless of its legal form of existence, is treated as a separate entity from parties having an economic interest. This means that a business is viewed as a distinct entity separate from its owners, shareholders, creditors, or any other parties with an economic interest in the business. Under the entity concept, the financial transactions of the business are recorded separately from those of the owner or other parties. This enables the business to track its financial performance and position accurately, and to prepare financial statements that are useful for decision-making. For example, if a business owner invests $10,000 of personal funds into the business, the entity concept requires that the transaction be recorded as a liability owed to the owner by the business. Similarly, if the business borrows $5,000 from a bank, the loan is recorded as a liability owed to the bank by the business. By treating the business as a separate entity, the entity concept enables stakeholders to evaluate the financial performance of the business without confusion or distortion caused by mixing personal transactions with business transactions.
Question 7 Report
The rules of double entry states that
Answer Details
Double entry accounting is a method of recording financial transactions in which every transaction is recorded in two accounts: one account is debited and another is credited. This means that for every debit entry (money going out of an account), there must be a corresponding credit entry (money coming into an account), and vice versa. The purpose of double entry accounting is to ensure accuracy and provide a clear and complete record of all financial transactions. This helps to prevent errors and fraud, and allows for easy reconciliation and tracking of financial information.
Question 8 Report
Use the question to answer this question:
| Opening stock | ₦ |
| Department A B |
100 800 |
| Purchases: A B Wages of workers Salaries |
1500 2000 50 100 |
| Sales A B |
3000 5000 |
Expenses are to be shared in the ratio of sales.
What was the cost of goods sold?
Answer Details
Question 9 Report
If only wages is shown on the trial balance, it should be charged to the
Question 10 Report
The cost of a machine is ₦10,000. The residual value is ₦4,000. It is expected to last for 4 years. Using the straight line method, what is the amount of depreciation charged per annum?
Answer Details
The straight line method of depreciation is a simple way of calculating the amount of depreciation to be charged each year for an asset. To use this method, we subtract the residual value (the value of the asset after it has been fully depreciated) from the original cost of the asset, and then divide this by the number of years the asset is expected to last. So, for the machine in this question: - Original cost: ₦10,000 - Residual value: ₦4,000 - Years expected to last: 4 The amount of depreciation to be charged per year would be: ₦10,000 - ₦4,000 = ₦6,000 ₦6,000 ÷ 4 years = ₦1,500 So, the amount of depreciation charged per annum is ₦1,500.
Question 11 Report
In the absence of partnership agreement, a loan by a partner attracts interest at
Answer Details
Question 12 Report
The purpose of profit and loss account is to ascertain
Answer Details
The purpose of a profit and loss (P&L) account is to show the financial performance of a business over a specific period of time, usually a month or a year. It helps to determine the net profit or loss of a company by showing the total revenue earned and the total expenses incurred during the period. The P&L account starts with the gross profit, which is calculated by subtracting the cost of goods sold (COGS) from the total revenue. Gross profit shows the amount of money the company made from its sales before any other expenses are taken into account. Next, the P&L account lists all the expenses incurred by the company during the period, such as wages, rent, utilities, advertising, and other operating costs. These expenses are subtracted from the gross profit to arrive at the net profit or net loss. The net profit or loss is the final result of the P&L account and shows whether the company made a profit or suffered a loss during the period. If the net profit is positive, it means the company had more revenue than expenses and made a profit. If the net profit is negative, it means the company had more expenses than revenue and suffered a loss. In conclusion, the purpose of a P&L account is to determine the net profit or loss of a company by showing the total revenue earned, the total expenses incurred, and the difference between the two.
Question 13 Report
The similarities between Receipts and payments and income and expenditure account is
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Question 14 Report
Goods can be charged to branches using any of these pricing methods except
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Question 15 Report
In the preparation of account, the owners of the business and the business concerned are treated as:
Answer Details
In the preparation of accounting records, the owners of the business and the business concerned are treated as separate legal entities. This means that the business is treated as a distinct entity from its owners, and is recognized as having its own financial position, income, and expenses. This is because the business is a separate legal entity, meaning it has its own legal status and is capable of entering into contracts and owning property. For example, if a business takes out a loan, the debt belongs to the business and not to the individual owners. Similarly, if the business makes a profit, the profit belongs to the business and not directly to the owners. Separating the business from its owners in this way allows for a clear and accurate picture of the financial performance of the business, and enables the owners to assess the success of the business as a whole. It also ensures that the business is held responsible for its financial obligations and liabilities, rather than the individual owners.
Question 16 Report
Given:
Fixed assets Liabilities Current assets |
₦ 55,000 20,000 13,000 |
What is the capital?
Question 17 Report
A company goods sent to branch at invoiced price is ₦30,870 at cost plus 25%. The mark-up is
Answer Details
The mark-up in this scenario is ₦6,174. When a company sells goods to its branch, it usually does so at a price that is higher than the cost price, to make a profit. In this case, the invoiced price of the goods sent to the branch is ₦30,870, which includes a markup of 25% on the cost price. To find the cost price, we can use the following formula: Cost price = Invoiced price / (1 + Markup percentage) Plugging in the values, we get: Cost price = ₦30,870 / (1 + 25%) = ₦24,696 Now, to find the markup, we can use the following formula: Markup = Invoiced price - Cost price Plugging in the values, we get: Markup = ₦30,870 - ₦24,696 = ₦6,174 Therefore, the mark-up in this scenario is ₦6,174. This represents the amount that the company has added to the cost price of the goods to arrive at the invoiced price that it charged to its branch.
Question 19 Report
Use the question to answer this question:
| Opening stock | ₦ |
| Department A B |
100 800 |
| Purchases: A B Wages of workers Salaries |
1500 2000 50 100 |
| Sales A B |
3000 5000 |
Expenses are to be shared in the ratio of sales.
The net profit for departmental A is
Answer Details
Question 20 Report
Given:
Ordinary share dividend ₦100,000, General reserve ₦4,100, Net profit b/d ₦27,370, corporation tax ₦2,500, Profit and loss ₦28,200, Interim ordinary dividend ₦4,050, Goodwill 20,50 provide for preference Dividend ₦2100 and Final ordinary Dividend of 5% and also write off Goodwill at ₦1500.
The retained profit in the Appropriation account is
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Question 21 Report
One of these is not a similarity between Joint Venture and Partnership.
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Question 22 Report
Use the information below to answer this question.
Ojo, Sam and Ade are in partnership sharing profit in the ratio 4 : 3 : 1 respectively.
Extract from their books for the year ended are
Interest on drawings and capital is allowed 5% respectively and profit for the year amounted to ₦4,950
Ojo's share of profit is
Answer Details
Question 23 Report
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Industry ltd, issued 100,000 shares at ₦1 each out of its Authorized share capital of ₦200,000 at ₦1 each. At the of the first call, all shareholders paid in full, except for two shareholder who owes ₦20,000.
The company's paid-up capital is
Answer Details
Question 24 Report
Retained profits is an example of
Answer Details
Retained profits are an example of revenue reserves. Revenue reserves are profits earned by a company that are not distributed as dividends to its shareholders but are kept in the business as a form of retained earnings. Retained profits are a portion of the company's profits that are not paid out as dividends but are instead reinvested in the company to support its growth, pay off debts or improve its operations. These retained profits can be accumulated over time, allowing a company to build up its reserves and strengthen its financial position. This can be particularly useful during times of economic uncertainty or market downturns, as the company will have more financial flexibility and resources to weather the storm. Therefore, retained profits are a crucial component of a company's overall financial health, and they are an example of revenue reserves.
Question 25 Report
Which of the following cannot depreciate?
Answer Details
Land is the item that cannot depreciate. Depreciation is the reduction in the value of a fixed asset due to wear and tear, obsolescence or other factors. It is a non-cash expense that is charged against the income of a company over the useful life of the asset. However, land is a fixed asset that has an unlimited useful life, and its value does not diminish over time. Therefore, it cannot be depreciated. On the other hand, plant and machinery, motor vans, and premises are all fixed assets that have a limited useful life, and their values decrease over time due to wear and tear, obsolescence or other factors. As a result, they can be depreciated. In summary, land is the item that cannot be depreciated, while plant and machinery, motor vans, and premises are all items that can be depreciated.
Question 26 Report
Bought motor vehicle ₦60 paying by cheque. The effect of the transaction will be
Answer Details
The effect of the transaction will be an increase in the assets of the motor vehicle account and a decrease in the assets of the bank account. When you bought the motor vehicle and paid for it by cheque, you transferred ₦60 from your bank account to the account of the seller. This means that the assets of your bank account decreased by ₦60, while the assets of the motor vehicle account increased by ₦60. In other words, the transaction resulted in the transfer of ₦60 worth of value from your bank account to the motor vehicle account. Therefore, there is no increase in liabilities of the bank account because you did not borrow any money to make the purchase. To summarize, the transaction of buying a motor vehicle and paying for it by cheque resulted in an increase in the assets of the motor vehicle account and a decrease in the assets of the bank account.
Question 27 Report
Discount received is charge to
Answer Details
Discount received is a reduction in the amount paid for goods or services purchased by a company. This reduction is usually given by a supplier to a customer as an incentive to encourage prompt payment or to build customer loyalty. In accounting, discount received is considered a gain for the company and is therefore credited to the profit and loss account. The profit and loss account is an account that records all revenues and gains on one side, and all expenses and losses on the other side, for a particular period. By recording discount received in the profit and loss account, the company can track and report its total gains for a specific period, and also calculate the net profit or loss for that period. This helps the company to make informed decisions about its operations and financial position, and to meet its reporting requirements. Therefore, the correct answer is option (B) - profit and loss account. Discount received is a gain for the company, and it is credited to the profit and loss account to be recorded as part of the company's total gains and revenues for a specific period.
Question 28 Report
An ordinary share of ₦100 was issued at ₦80. The share was issued at
Answer Details
An ordinary share of ₦100 was issued at ₦80, which means it was issued at a discount. A share is said to be issued at a discount when its issue price is lower than its par or face value. In this case, the par value of the share is ₦100, but it was issued at ₦80, which is lower than its face value. Therefore, the difference between the issue price and the par value (₦100 - ₦80 = ₦20) is the discount. On the other hand, if a share is issued at a price higher than its par value, it is said to be issued at a premium. When a share is issued at its face value, it is said to be issued at par. Lastly, a loss is incurred when the selling price of an asset is lower than its purchase price. However, that is not the case in this scenario as there is no information on any selling of the share.
Question 30 Report
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Industry ltd, issued 100,000 shares at ₦1 each out of its Authorized share capital of ₦200,000 at ₦1 each. At the of the first call, all shareholders paid in full, except for two shareholder who owes ₦20,000.
The Unissued capital of the company is
Answer Details
The authorized share capital of Industry Ltd is ₦200,000, which means the maximum amount of money the company can raise from issuing shares is ₦200,000. The company issued 100,000 shares at ₦1 each, so it raised ₦100,000. This means that ₦100,000 of the authorized share capital has been issued. All shareholders paid in full except for two shareholders who owe a total of ₦20,000. This means that the company received a total of ₦80,000 in payment for the issued shares. The unissued capital of the company is the portion of the authorized share capital that has not been issued yet. Since the authorized share capital is ₦200,000, and ₦100,000 has been issued, the unissued capital is ₦100,000. Therefore, the answer is (2) ₦200,000 is the authorized share capital, and ₦100,000 is the unissued capital.
Question 31 Report
The two recognised accounting bases are
Answer Details
The two recognized accounting bases are Accrual and Cash. Accrual accounting recognizes economic events regardless of when payment is received or made. This means that transactions are recorded in the accounts when they occur, regardless of when the cash is received or paid. Cash accounting, on the other hand, only recognizes transactions when cash is received or paid. This means that transactions are only recorded in the accounts when the cash changes hands. In simple terms, accrual accounting provides a more complete picture of a company's financial performance, while cash accounting is more focused on the company's actual cash flow.
Question 32 Report
From the following, determine the value of closing stock using:
Feb 1 purchased 200 units @ ₦2.00 each
Feb 3 purchased 100 units @ ₦1.00 each
Feb 4 issued 120 units @ ₦5.00 each
Feb 5 purchased 50 units @ ₦3.00 each
Feb 6 issued 100 units @ ₦4.00 each
Answer Details
Question 33 Report
Use the information to answer this question
Receipts and Payment Account (Extract)
N
Bal b/f 3650 Insurance 900
Subscription (99) 7500 Rate 11,700
(2000) 1000 Bal c/d 8,050
Fees 8500
20,650 20,650
The following information were given:
Rates owing Insurance prepaid Subscription in arrears |
1/199 3,600 50 700 |
31/12/99 2000 1000 600 |
What is the opening cash balance
Answer Details
The opening cash balance can be found by looking at the Receipts and Payments Account. The "Bal b/f" column represents the balance brought forward from the previous period, which is the opening cash balance. In this case, the opening cash balance is ₦3,650, which is the first entry under "Bal b/f" in the Receipts and Payments Account. Therefore, the correct option is (3) ₦3,650.
Question 34 Report
Use the question to answer this questionThe following information were extracted from the books of Miliki state
Sinking of bore holes Purchase of Motor car Stationery Electricity Purchase of drugs Purchase of beds |
₦ 2,900,000 920,000 300,000 45,000 76,000 425,000 |
Recurrent expenditure is
Question 35 Report
A rent of ₦50,000 was paid by samson to his landlady by cheque. The double entry in Samson's book is
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Question 36 Report
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Payment to creditors ₦12,250
Creditors at start ₦550
Creditors at end ₦830
What is the creditors amount in the balance sheet?
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Question 37 Report
One of the objective of maintaining the account of a branch at the head office is to
Answer Details
One of the objectives of maintaining the account of a branch at the head office is to access the performance of the branches. When a company has several branches, it is essential to keep track of the financial performance of each branch to ensure that they are operating efficiently and generating profits. By maintaining the account of each branch at the head office, the management can easily access the financial records of each branch and compare them to identify the profitable and non-profitable branches. The head office can analyze the financial statements of each branch, including the income statement, balance sheet, and cash flow statement, to determine the financial health of the branch. This information can help the head office make informed decisions, such as allocating resources to profitable branches or taking corrective actions to improve the performance of non-profitable branches. In summary, maintaining the account of a branch at the head office allows the management to access the financial performance of each branch, which is essential for making informed decisions and ensuring the profitability of the entire organization.
Question 38 Report
The rate of interest on capital for Ade is
Question 39 Report
Mr Ojo gives you the following information on 31st July 2017
Opening Stock 7,000
Closing Stock 12,000
Purchases 60,000
Expenses 4,500
Uniform margin of 33 13 %
You are required to calculate the sales
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