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Question 1 Report
The Act establishing the institute of Chartered Accountants of Nigeria (ICAN) came into force on?
Answer Details
The Act establishing the Institute of Chartered Accountants of Nigeria (ICAN) came into force on 1st September, 1965. This act provided for the establishment of the ICAN as a professional accounting body in Nigeria with the mandate to regulate the accounting profession and promote the highest standards of professional conduct among its members.
Question 2 Report
The contribution marginal on a job is the?
Answer Details
The contribution margin on a job is the excess of sales revenue over variable costs. In other words, it is the amount of money available from a particular job or product to cover the fixed costs of the business and contribute to the profit. It is calculated by subtracting the variable costs associated with a product or job from the revenue generated by that product or job. The contribution margin is important because it helps businesses determine how much they need to sell in order to cover their fixed costs and make a profit. By understanding the contribution margin, businesses can make better decisions about pricing, production, and sales strategies.
Question 3 Report
Responsibility accounting is particularly concerned with?
Answer Details
Responsibility accounting is a type of management accounting that focuses on evaluating and analyzing the performance of individual departments, managers, or other organizational units within a company. It is particularly concerned with controllable costs, which are costs that can be directly influenced or managed by the individual or department responsible for them. By monitoring and analyzing the performance of individual units, responsibility accounting allows for greater accountability and decision-making at the operational level, ultimately contributing to the overall success of the company. Therefore, the correct answer is "controllable costs."
Question 4 Report
Sobande Incorporation acquired a machine that involved the following expenditures and related factors. N
Gross invoice price 15,000
Sales tax 900
Purchases discount taken 300
Freight 750
Assembly of machine 500
Installation of machine 800
Assorted spare parts for future use 1200
Turing and adjusting machine 700What is the initial accounting cost of the machine?
Question 5 Report
A powerful instrument of control over both the sales ledger and the clek whose duty is to post the ledger is the?
Answer Details
Question 6 Report
Mayana Corporation uses special journals to record its transactions. If one of Mayana's customers returns merchandize purchased with cash (for a refund), it makes an entry in the?
Answer Details
Question 7 Report
Derive the total sales figure from the following information extracted from a firm's cash book and other relevant records. Total debtors b/f N 5,600
Total cash receipts from debtors
And cash sales N 153,000
Total debtors c/f N 6,800
Answer Details
Question 8 Report
Use the information below to answer question 38 and 39.Dan and Baker are in partnership with capital of ₦50,000 and ₦30,000 each. The partnership agreement provides that:(i) profits be shared in the ratio of capital. (ii) Baker be paid a salary of ₦8,000.
(iii) both partners earn interest on capital at 6% p.a.
(iv) both partners pay interest on drawing at 6% p.a.
At the end of the year, Dan drew ₦15,000 while Baker drew ₦14,000 in four installment on 31/3,30/6,30/9 and 31/12. The net profit for the year was ₦48,000. ₦5,000 is to be written off the Goodwill account.What is the interest on the drawing by Baker?
Answer Details
Question 10 Report
The purchase of two generators by Hassan Electronics Enterprises should be recorded as?
Answer Details
The purchase of two generators by Hassan Electronics Enterprises should be recorded as an acquisition of fixed assets. This is because generators are considered as tangible long-term assets that are used to generate revenue over an extended period of time. The cost of acquiring the generators should be capitalized and recorded as an asset on the balance sheet. It is important to note that this is different from an expense in the general office expenses account, which is usually associated with the day-to-day running of the business. Similarly, it is not considered as a part of the capital in the capital account, which usually reflects the contributions made by the owners of the business.
Question 11 Report
The total of the discounts received column in the cash book is posted to the?
Answer Details
Question 12 Report
Which of the following is an intangible asset and a measure of a firm's superior earning power?
Answer Details
Goodwill is an intangible asset and a measure of a firm's superior earning power. Goodwill represents the difference between the amount paid for a company during an acquisition and its net tangible assets (assets that can be physically touched or quantified). It arises when a company is acquired for a price that exceeds the fair value of its net assets, and reflects the value of its reputation, customer base, brand, and other intangible factors that contribute to its future earnings potential. Therefore, option B (Goodwill) is the correct answer.
Question 13 Report
A business transaction is recorded in the books of account when the?
Answer Details
Question 14 Report
A pottery company had sales of ₦176,000 during the current period and a gross profit rate of 40%.
The company's cost of merchandize available for sale during the period was ₦128,000. The company's ending inventory is?
Answer Details
Question 15 Report
The trading account is to a sole trader what income and expenditure account is to a?
Answer Details
The trading account is to a sole trader what income and expenditure account is to a non-profit making organization. The trading account shows the gross profit earned or loss incurred from buying and selling goods during an accounting period. It includes the cost of goods sold and the sales revenue. It is prepared by a trading organization like a sole trader, partnership, or a company that engages in buying and selling goods. Similarly, the income and expenditure account is used by non-profit organizations to record their income and expenses. It is used to calculate the surplus or deficit of the organization's operations for the accounting period. It includes all the revenue and expenses incurred by the organization in that period, including donations, grants, and other sources of income.
Question 16 Report
Which of the following indicate that a partnership business is in place?
(i) There is a business
(ii)It is run commonly by partners
(iii)It has profit-making in view
(iv) Partners' liability is limited
Answer Details
Question 17 Report
Use the information below to answer questions 11 and 12.
The initial imprest as at July Ist was ₦500. Petty cash vouchers with the custodian by July 15th added up to ₦394. An IOU slip received from a co-worker was ₦65 and there was a shortage of ₦5 cash. The co-worker made refund on July 18th just before the imprest was replenished.What was the actual cash in the till as at 15th July?
Answer Details
Question 18 Report
Which of the following entries is effected by a department when goods are charged to it at selling prices?
Answer Details
Question 19 Report
Money not required to meet chargeable expenditure in any fiscal year under cash accounting, should be?
Answer Details
Under cash accounting, money not required to meet chargeable expenditure in any fiscal year should be carried forward to the next financial year. This is because cash accounting records transactions when actual cash is received or paid, and any excess funds not used for expenses in the current fiscal year can be used to cover expenses in the future. It is important to note that the funds should be used for legitimate expenses and not for any other purposes. Therefore, carrying forward the unused funds ensures that they are available for future expenses and not surrendered to the consolidated revenue fund or returned to the taxpayer.
Question 20 Report
Under which of these conditions can a company issue shares at discount? (i)A resolution must be passed at a general meeting (ii) The amount of discount must be stated in the resolution (iii) The share must have existed for at least six years (iv) On the order of a court.
Answer Details
Question 21 Report
On Ist January, 1993, lobo Company purchased equipment for ₦18,000. it uses straight-line depreciation and estimates an eight-year useful life and a ₦2,000 salvage value. On 31st December, 1996, it sells the equipment for ₦80,0000. In recording this sales, it should reflect?
Answer Details
The company purchased the equipment for ₦18,000 and estimated its useful life to be eight years, with a salvage value of ₦2,000. Straight-line depreciation method is used to depreciate the equipment, which means that the cost of the equipment will be equally spread over eight years. Depreciation per year = (Cost - Salvage value) / Useful life Depreciation per year = (18,000 - 2,000) / 8 Depreciation per year = ₦2,000 So, by the end of 1996 (four years), the accumulated depreciation on the equipment will be: Accumulated depreciation = Depreciation per year x number of years Accumulated depreciation = ₦2,000 x 4 Accumulated depreciation = ₦8,000 The equipment's book value at the end of 1996 will be: Book value = Cost - Accumulated depreciation - Salvage value Book value = 18,000 - 8,000 - 2,000 Book value = ₦8,000 When the company sells the equipment for ₦80,000, it will have a gain or loss, which is the difference between the sales price and the book value. Sales price - Book value = Gain or loss ₦80,000 - ₦8,000 = ₦72,000 Since the sales price is higher than the book value, the company will have a gain of ₦72,000. Therefore, the answer is ₦6,000 gain.
Question 22 Report
N
Bank account 59,410
Capital account 50,000
Purchase account 20,000
Rent 2,500
Stationery 90
Typewriter 6,500
Sales 38,000In preparing a trial from the list of balances given above, what is the total in debit and credit columns?
Answer Details
Question 23 Report
What was the cost of materials available for use during the period?
Answer Details
Question 24 Report
A non-profit-making organization differs from a profit-making one in that?
Question 25 Report
In a public corporation, the capital expenditure incurred in a financial period is?
Answer Details
Question 26 Report
The balance on a purchase ledger control account represents the?
Answer Details
The balance on a purchase ledger control account represents the present amount that a business owes its suppliers at a particular date. It is a summary of all the balances on individual supplier accounts in the purchase ledger, and it shows the total amount owed to all suppliers collectively. This balance is important for managing cash flow and ensuring that the business has enough funds to pay its suppliers on time.
Question 27 Report
Determine the year''s purchase from the following information relating to a firm.
Total creditor''s b/f N 7,200
Total cash payment to suppliers N 98,800
Total creditors c/f N 8,400
Answer Details
The year's purchase is the ratio of the total credit purchases to the average creditors. To calculate the total credit purchases, we need to add the opening creditors balance (creditors b/f) to the purchases made during the year, then subtract the closing creditors balance (creditors c/f). Using the information provided, we can calculate the total credit purchases as follows: Total credit purchases = Creditors b/f + Purchases - Creditors c/f Total credit purchases = 7,200 + Purchases - 8,400 Total credit purchases = Purchases - 1,200 We do not have the purchases figure, but we can calculate it by adding the total cash payment to suppliers to the total credit purchases: Total credit purchases + Total cash payment to suppliers = Total purchases Purchases - 1,200 + 98,800 = Purchases + 97,600 97,600 = 1,200 + Purchases Purchases = 96,400 Now we can calculate the year's purchase by dividing the total credit purchases by the average creditors: Year's purchase = Total credit purchases / Average creditors Average creditors = (Creditors b/f + Creditors c/f) / 2 Average creditors = (7,200 + 8,400) / 2 Average creditors = 7,800 Year's purchase = 96,400 / 7,800 Year's purchase = 12.359 Rounding off to the nearest whole number, the year's purchase is 12. Therefore, the answer is: ₦100,000
Question 28 Report
The price paid by an acquiring company is the?
Answer Details
The correct answer is "purchase consideration". This refers to the amount paid by the acquiring company to the target company in exchange for the ownership of the target company's shares or assets. It can take the form of cash, shares, or a combination of both, and is typically negotiated as part of the merger or acquisition process. The purchase consideration reflects the value of the target company as determined by the acquiring company and is often influenced by factors such as market conditions, the target company's financial performance, and strategic considerations.
Question 29 Report
If a monthly insurance premium is remitted to a company by the state government, the initial deductions from employees are recorded in?
Answer Details
If a monthly insurance premium is remitted to a company by the state government, the initial deductions from employees are recorded in an Agency Fund. An Agency Fund is a fund established to account for assets held by a government in a purely custodial capacity for other governments, private organizations, or individuals. It is used to record assets that are received by one entity on behalf of another, with no intention of adding to or reducing the assets of the recipient entity. In this case, the state government is acting as an agent for the employees by deducting the insurance premium from their pay and remitting it to the insurance company on their behalf. Therefore, the deductions are recorded in an agency fund until they are remitted to the insurance company.
Question 30 Report
State Bank collected a note for A-Makura Company. This collection, not yet recorded in AL-Makura's books, appears on the bank reconciliation as?
Answer Details
Question 31 Report
When a transaction causes an assets account to increase, there is?
Answer Details
When a transaction causes an assets account to increase, there is no corresponding decrease of equal amount in the owner's equity account, an increase in a liability account, or a decrease of equal amount in a liability account. Therefore, the first option is incorrect. Instead, an increase in an assets account means that the value of the asset has gone up. This can be due to various reasons such as purchase, production, or an increase in the value of an existing asset. Since assets are owned by the company, an increase in assets increases the overall value of the company, which is reflected in the owner's equity account. So, the correct answer is that an increase in assets account will lead to an increase in the owner's equity account.
Question 32 Report
Umar and Ahemed share profit and losses equally and have capital balances of ₦40,000 and ₦60,000 respectively. If bdullahi purchases one-third interest with no bonus, how much will he have to contribute to the partnership?
Answer Details
If Abdullahi purchases one-third interest with no bonus, he will acquire one-third of the total capital of the partnership. The total capital of the partnership is the sum of Umar's capital balance and Ahmed's capital balance, which is ₦40,000 + ₦60,000 = ₦100,000. Therefore, one-third of the total capital of the partnership is ₦100,000/3 = ₦33,333. This means Abdullahi will have to contribute ₦33,333 to the partnership to acquire one-third interest with no bonus. Hence, the answer is ₦33,333.
Question 33 Report
The statement of affairs prepared from incomplete records can be described as?
Answer Details
A statement of affairs prepared from incomplete records is a balance sheet at a particular date showing the assets and liabilities of the business. It is called a "statement of affairs" because it lists the financial position of the business as it "stands" or exists at a specific moment in time. The statement is prepared by the accountant from incomplete records provided by the trader or business owner. The accountant uses available information to prepare the statement of affairs, such as a list of assets, liabilities, and any other information that can help determine the financial position of the business. This statement does not show the profit or loss made during the period but rather it shows the financial position of the business at a specific point in time.
Question 35 Report
To compute gearing ratio, divide?
Answer Details
Gearing ratio is a financial ratio that measures the proportion of a company's capital that is financed through debt. To compute the gearing ratio, you need to divide the long-term debts of the company by its equity capital. This ratio helps investors and analysts understand the level of financial risk associated with the company's capital structure, and how much of the company's operations are financed through debt. The higher the gearing ratio, the more debt the company has relative to its equity capital, which may increase financial risk in the event of economic downturns or other adverse events.
Question 36 Report
The objective of allocating all costs to producer is to?
Answer Details
The objective of allocating all costs to producer is to compute the contribution of the product to the final profit. By allocating all costs to the producer, a company can determine the total cost of producing a product, including both direct and indirect costs. This information can then be used to calculate the contribution margin, which is the amount of money left over after deducting all costs directly related to the production of the product. This contribution margin is a key indicator of the product's profitability, as it shows how much money the product is contributing towards the company's overall profit. Allocating all costs to the producer helps ensure that the contribution margin is accurate and reflects all of the costs associated with producing the product.
Question 37 Report
Use the information below to answer question 28 and 29.
Raw materials inventory at the beginning of a period was ₦46,800 and at the close of the period there was a balance of ₦38,600. From the purchases made during the period, defective materials costing ₦9,200 were returned. Cost of materials consumed during the period was ₦448,500.
What was the total purchases made during the period?
Answer Details
Question 38 Report
Granada Corporation has net assets of ₦600,000 and contributed capital of ₦180,000. The corporation has 30,000 shares of common stock outstanding with no preferred stock. This suggest that the corporation has?
Answer Details
The book value per share is calculated by dividing the net assets by the number of shares outstanding. In this case, the net assets are ₦600,000 and the number of shares outstanding is 30,000, so the book value per share is ₦20 per share (₦600,000 ÷ 30,000 shares). Therefore, the corporation has a book value of ₦20 per share.
Question 39 Report
Mini Enterprises Sales Ledger as at 31/12/94
Read:
N
Balance b/f 12750
Total credit sales 28185
Payments by debtors 12112
Discount allowed 638
Sales returns 1500Prepare the sales ledger control account and determine the balance due from debtors.
Question 40 Report
Cost reports for the intention of management should reflect?
Answer Details
Cost reports for the intention of management should reflect cost and comparable data useful in decision-making. This means that management should receive reports that provide information that will help them make informed decisions about the organization's operations. The reports should include detailed information on costs, including both controllable and non-controllable expenses, as well as comparisons with industry benchmarks and other relevant data. This will allow management to identify areas where costs are high and take corrective action, as well as identify areas where the organization is performing well and make decisions that will help maintain or improve that performance. Therefore, the option that best reflects this idea is "cost and comparable data useful in decision-making".
Question 41 Report
The difference between the closure of the books of a branch and those of a separate company is that?
Answer Details
The difference between the closure of the books of a branch and those of a separate company is that there is no retained earnings account on the branch's books. When the books of a branch are closed, the revenue and expenses account is closed to the branch current account, while in a separate company, the revenue and expenses account is not closed to the home office current account. In other words, a branch is considered a part of the parent company, and its financial records are consolidated with those of the parent company, whereas a separate company operates independently and maintains its own financial records.
Question 42 Report
The amount required to replenish the payments made from the imprest was?
Answer Details
Question 43 Report
An advantage of the use of the voucher system is that it?
Answer Details
The voucher system is a method of controlling and documenting financial transactions in a business. One of its advantages is that it ensures that every expenditure is reviewed and verified before payment is made. This is because a voucher is created for each transaction, and it must be approved by an authorized person before payment can be made. This helps to prevent errors, fraud, or unauthorized spending. Therefore, option D, "ensure that every expenditure is reviewed and verified before payment is made", is the correct answer.
Question 44 Report
The ordinary shareholders enjoy the following rights except the right to?
Answer Details
The ordinary shareholders of a company have various rights, including the right to vote at annual general meetings, elect the board of directors, and participate in additional issues of shares. One of the most important rights is to receive dividends at a predetermined rate. However, the right that they do not enjoy is the right to determine their own level of dividends or to force the company to pay dividends if it does not want to. This is the prerogative of the board of directors, who may decide to retain earnings for future growth or other purposes. Therefore, the answer is: determine their own level of dividends or to force the company to pay dividends if it does not want to.
Question 45 Report
If the inventory at the end of the current year is understated and the error is not caught during the following year, the effect is to?
Answer Details
Question 46 Report
The limitations of the receipts and payments account arise mainly because of the reliance on?
Answer Details
The limitations of the receipts and payments account arise mainly because of the reliance on cash movement as evidence of transaction. This means that only cash transactions are recorded, which may not give a complete picture of the financial status of the organization. Non-cash transactions such as credit sales, purchases on credit, and depreciation are not taken into account. Also, the timing of cash receipts and payments may not correspond with the actual timing of the transaction. In addition, the receipts and payments account does not provide information on the capital account of the organization.
Question 47 Report
When forming a partnership, new partners should record non-monetary assets on the new partnership's books at?
Answer Details
New partners should record non-monetary assets on the new partnership's books at their current fair market values. This is because the fair market value represents the most accurate estimate of the asset's value at the time of the formation of the partnership. The historical costs when first used or purchased may not reflect the current value of the asset, and using the highest values practical for future income tax deductions could lead to overvaluing the assets. Therefore, using the fair market value ensures that the assets are recorded at a realistic value that is fair to all partners.
Question 48 Report
Dan and Baker are in partnership with capitals of ₦50,000 and ₦30,000 each. The partnership agreement provides that: (i) profits be shared in the ratio of capital (ii) both partners earn interest on capital at 6% p.a (iv) both parents pay interest on drawings at 6% p.a. At the end of the year, Dan drew ₦15,000 while baker drew ₦14,000 in four installments on 31/3, 30\6, 30\9 and 30\12. The net profit for the year was ₦48,000. ₦5000 is to be written off the goodwill account.
Determine the total interest on capital due to the partners?
Answer Details
Dan's capital = ₦50,000 Baker's capital = ₦30,000 Total capital = ₦80,000 Interest on Dan's capital = 6% of ₦50,000 = ₦3,000 Interest on Baker's capital = 6% of ₦30,000 = ₦1,800 Total interest on capital due to the partners = ₦3,000 + ₦1,800 = ₦4,800 Therefore, the answer is ₦4800.
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