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Question 1 Report
The accounting principle that states that insignificant expenditures are not to be taken into account is the
Answer Details
The accounting principle that states that insignificant expenditures are not to be taken into account is the materiality convention. This principle suggests that only significant information and transactions should be recorded in the financial statements, as small or insignificant items are unlikely to impact the financial decision-making process of users. In other words, the materiality convention allows accountants to use their judgement to determine whether an item is large enough to be recorded in the financial statements or can be disregarded. This principle helps to ensure that the financial statements remain relevant and useful to users, as they focus on the significant aspects of the entity's financial performance and position.
Question 2 Report
Use the following information to answer given question
\(\begin{array}{c|c} & ₦ \\ \hline \text{Opening stock of raw materials} & 24,750\\ \text{Purchases of raw materials} & 129,640\\ \text{Carriage on raw materials} & 10,000\\ \text{Closing stock of raw materials} & 45,000 \\ \text{Factory supervisor's salary} & 30,000\\ \text{Wages of factory hands} & 50,000 \\ \text{Royalties paid}& 18,000\\ \text{Insurance of factories} & 62,000\\ \text{Work-in-progress(opening)} & 23,000 \\ \text{Raw material returned} & 12,200\end{array}\)
The total overhead expenses is
Answer Details
Question 4 Report
The method that provides a reliable check upon cash and stock at the branch and discloses the gross profit in the account is
Answer Details
The method that provides a reliable check upon cash and stock at the branch and discloses the gross profit in the account is the "cost plus percentage" method. This method involves adding a percentage markup to the cost price of goods to determine the selling price. By comparing the selling price with the cost price plus markup, it is possible to calculate the gross profit on the sale of goods. This method also provides a check on the cash and stock at the branch, as the cost of goods sold and the stock on hand can be verified through physical counts and reconciliations with the branch's accounting records. Therefore, the cost plus percentage method is a reliable method for calculating gross profit and monitoring the cash and stock at a branch.
Question 5 Report
Use the following information to answer given question
\(\begin{array}{c|c} & ₦ \\ \hline \text{Opening stock of raw materials} & 24,750\\ \text{Purchases of raw materials} & 129,640\\ \text{Carriage on raw materials} & 10,000\\ \text{Closing stock of raw materials} & 45,000 \\ \text{Factory supervisor's salary} & 30,000\\ \text{Wages of factory hands} & 50,000 \\ \text{Royalties paid}& 18,000\\ \text{Insurance of factories} & 62,000\\ \text{Work-in-progress(opening)} & 23,000 \\ \text{Raw material returned} & 12,200\end{array}\)
The value of raw material consumed is
Answer Details
The value of raw material consumed is calculated by subtracting the closing stock of raw materials from the sum of the opening stock of raw materials, purchases of raw materials, and carriage on raw materials. This is because the raw materials that were purchased during the period may not have been entirely used up in production, and so the closing stock must be taken into account. The calculation is as follows: Value of raw material consumed = (Opening stock + Purchases + Carriage) - Closing stock Value of raw material consumed = (24,750 + 129,640 + 10,000) - 45,000 Value of raw material consumed = 164,390 - 45,000 Value of raw material consumed = 119,390 Therefore, the value of raw material consumed is ₦119,390.
Question 6 Report
On 1/7/07, a trader owed wages of Le 2,000. During the year ended 30/6/08, wages of Le 2,400 were owed and Le 8,000 were paid. Using the information, wages recorded in the balance sheet as at 30/6/08 is
Answer Details
Question 7 Report
A temporary difference of bank occurs in only one account with the second figure stated, this is an error of
Answer Details
A temporary difference of bank occurring in only one account with the second figure stated is an error of the suspense account. A suspense account is used to temporarily hold transactions that cannot be properly classified to a specific account, either due to incomplete information or errors. Once the necessary information is obtained or errors are corrected, the transactions are moved from the suspense account to their appropriate accounts. Therefore, if a temporary difference of bank occurs in only one account with the second figure stated, it means that the transaction was not properly classified, and it should be moved to the appropriate account through the use of the suspense account.
Question 8 Report
A trial balance is prepared to
Answer Details
A trial balance is prepared to test the arithmetical accuracy of ledger entries. It is a statement that lists all the ledger accounts and their balances, either debit or credit, to verify that the total of all debits equals the total of all credits. If the totals do not match, it indicates that there is an error in the ledger entries, which needs to be corrected. The trial balance does not detect fraud or determine opening capital, but it helps to identify errors in the accounting process and ensure that the financial statements are accurate.
Question 9 Report
Which of the following is the reason why a seller allows a customer cash discount?
Answer Details
A cash discount is an incentive offered by a seller to a customer for paying an invoice or bill within a stated period. The reason why a seller allows a customer cash discount is to encourage prompt payment of the invoice or bill. By offering a cash discount, the seller reduces the amount owed by the customer, which in turn reduces the risk of non-payment. This can improve the seller's cash flow and reduce the need for costly debt collection efforts. Therefore, the correct option is: settlement of account within a stated period.
Question 10 Report
Use the following information to answer given question
\(\begin{array}{c|c} & ₦ \\ \hline \text{Opening stock of raw materials} & 24,750\\ \text{Purchases of raw materials} & 129,640\\ \text{Carriage on raw materials} & 10,000\\ \text{Closing stock of raw materials} & 45,000 \\ \text{Factory supervisor's salary} & 30,000\\ \text{Wages of factory hands} & 50,000 \\ \text{Royalties paid}& 18,000\\ \text{Insurance of factories} & 62,000\\ \text{Work-in-progress(opening)} & 23,000 \\ \text{Raw material returned} & 12,200\end{array}\)
The prime cost is
Answer Details
Question 11 Report
Bad debts written off is shown as
Answer Details
Bad debts written off is shown as a credit in the sales ledger. When a business decides to write off a bad debt, it means that they are acknowledging that they are unlikely to receive the payment from the debtor. As a result, they need to remove the debtor's account from their accounts receivable. To do this, the business will credit the debtor's account in the sales ledger, which reduces the accounts receivable balance. The corresponding entry will be a debit to the bad debts expense account, which represents the cost of doing business with a non-paying customer. Therefore, bad debts written off is shown as a credit in the sales ledger.
Question 12 Report
The balance in a sales Ledger Counter Account indicates the
Answer Details
The balance in a sales ledger counter account indicates the total debtors. A sales ledger is a record of all the sales transactions of a business with its customers, and the sales ledger counter account is a summary account that shows the total amount owed to the business by its customers. The balance in this account represents the total amount of money that is owed by customers and has not yet been paid. This balance is important for businesses to keep track of, as it represents the amount of money that they are owed and need to collect in order to maintain their cash flow and financial stability.
Question 13 Report
Money received from a customer is recorded in the customer's account and bank account; the accounting concept applied is
Answer Details
The accounting concept applied in the scenario described is dual aspect. Dual aspect is a fundamental principle in accounting which states that every financial transaction has two aspects: a debit and a credit. In this case, the money received from the customer is recorded as a debit in the bank account to reflect an increase in the bank balance, and as a credit in the customer's account to reflect a decrease in the customer's outstanding balance. This ensures that the accounting equation remains in balance, with total assets equaling total liabilities plus equity. The dual aspect principle is essential in ensuring accurate financial record-keeping and reporting.
Question 14 Report
Use the following information to answer the question given
\(\begin{array}{c|c} \text{Jan. 1} & \text{₦}\\ \hline \text{1/1/08 Capital introduced by cash} & 50,000 \\ \text{2/1/08 Bought goods for retail by cash} & 10,000\\ \text{3/1/08 Sold fixtures by cash} & 5,000\\ \text{4/1/08 Sold goods to Lagbaja on credit} & 3,000\\ \text{5/1/08 Bought goods on credit from Tamedu}& 8,000\end{array}\)
Balance in Purchases account at 5/1/08 is
Answer Details
The balance in the purchases account at 5/1/08 can be calculated as follows: Purchases = Cost of goods sold + Closing stock - Opening stock From the given information, we know that goods were bought for ₦10,000 on 2/1/08 and on credit for ₦8,000 on 5/1/08. Therefore, the total purchases for the period is ₦18,000 (₦10,000 + ₦8,000). Since no information was given about the cost of goods sold or the value of the opening and closing stock, we cannot calculate the exact value of the purchases account balance. However, we do know that the balance of the purchases account should be equal to the total purchases made during the period. Therefore, the answer is ₦18,000.
Question 15 Report
The accounting treatment when goods are sent to branch at a cost is, debit branch stock account and credit
Answer Details
When goods are sent to a branch, the accounting treatment is to debit the branch stock account and credit the goods sent to branch account. The goods sent to branch account is a nominal account which is used to record the cost of goods sent to the branch. The balance in the account represents the total cost of goods dispatched to the branch and is transferred to the branch stock account on the branch's books. This is done to keep track of the stock sent to the branch and to ensure that it is properly recorded on the branch's books.
Question 16 Report
Where a wrong figure occurs in only one account with the second figure correctly stated, this is an error of
Answer Details
Question 17 Report
Where fixed capitals are maintained, partners' drawings are transferred to the
Answer Details
Question 18 Report
Sales was D12,500, total expenses was D2,500 and net profit is 10% of sales what is the gross profit?
net profit = 0.1 x 12500 = 1250
gross profit = sales - cogs
net profit = gross profit - expenses
1250 + 2500
Answer Details
The formula for calculating gross profit is Sales - Cost of Goods Sold (COGS). However, the question does not provide the COGS figure. So, we can use the formula for calculating net profit which is Net Profit = Gross Profit - Total Expenses. We are given that Net Profit is 10% of Sales, which means Net Profit = 0.1 x Sales. So, we can substitute the given values to get: 1250 = Gross Profit - 2500 Solving for Gross Profit, we get: Gross Profit = 1250 + 2500 = 3750 Therefore, the gross profit is D3,750.
Question 19 Report
Which of the following is added to the proprietor's capital?
Answer Details
Net profit is added to the proprietor's capital. Net profit is the amount by which total revenue exceeds total expenses during a certain period of time. This amount represents the profit that the business has earned after deducting all of its expenses, including the cost of goods sold, operating expenses, and taxes. Since the proprietor is the owner of the business, any profit earned by the business belongs to the proprietor and is added to their capital. On the other hand, gross profit is the profit earned by a business before deducting its operating expenses, while net sales are the total revenue earned by a business from the sale of goods or services after deducting any discounts or returns. Neither of these figures represent the amount that can be added directly to the proprietor's capital.
Question 20 Report
A partners whose liability goes beyond his capital is known as
Answer Details
A partner whose liability goes beyond his capital is known as a general partner. This means that the general partner is personally liable for any debts or obligations incurred by the partnership, even if their personal assets must be used to settle these debts. In contrast, a limited partner has limited liability, meaning that their personal assets are protected and they are only liable for the amount of capital they have contributed to the partnership.
Question 21 Report
Carriage inwards is shown on the
Answer Details
Carriage inwards refers to the cost of transportation incurred by a business in bringing goods purchased from a supplier to their own premises. This cost is typically included as part of the cost of the goods purchased, and is therefore shown on the debit side of the Trading Account. The Trading Account is a financial statement that shows the calculation of Gross Profit or Loss for a business by deducting the cost of goods sold from the sales revenue. So, the correct answer is: "debit side of the trading account".
Question 22 Report
On 1/7/07, a trader owed wages of Le 2,000. During the year ended 30/6/08, wages of Le, 2,400 were owed and Le 8,000 were paid. Using the information, the wages recorded in the balance sheet as at 30/6/08 is
Answer Details
Question 24 Report
A financial plan of action expressed in monetary terms is a/an
Answer Details
A financial plan of action expressed in monetary terms is called a "budget". It is a financial statement that outlines a person's or organization's expected income and expenses for a certain period of time. A budget helps to plan and prioritize spending, and ensure that there is enough money to cover all necessary expenses. A budget may also include financial goals and targets, and can be adjusted as circumstances change. In short, a budget is a tool for managing money and achieving financial stability.
Question 25 Report
The amount for which a business is sold is that
Answer Details
The amount for which a business is sold is known as the "consideration" or "purchase consideration". This is the total amount paid by the buyer to the seller for the purchase of the business. It includes not only the price paid for the business, but also any other costs or liabilities assumed by the buyer as part of the purchase. The consideration is typically negotiated between the buyer and the seller, and may be paid in various forms, such as cash, stock, or other assets. The consideration paid may also include a portion for goodwill or other intangible assets.
Question 26 Report
Subscriptions received in advance are
Answer Details
Subscriptions received in advance refers to payments received by an organization for future services or products that have not yet been provided. For example, a magazine publisher may receive subscription payments for the next year's issues before the year begins. Such payments are shown as a current liability in the balance sheet because the organization has an obligation to deliver the service or product in the future. Therefore, it is not included in the income and expenditure account or receipts and payment account until the services or products are provided.
Question 27 Report
Which of the following is not found in a trial balance?
Answer Details
Closing stock is not found in a trial balance. A trial balance is a statement of all the ledger account balances within a company's financial accounting system that are used to confirm that the total debit balance of all ledger accounts equals the total credit balance of all ledger accounts. While opening stock, capital, and rent paid are all ledger accounts, closing stock is a temporary account that is closed at the end of the accounting period and used to calculate the cost of goods sold. As a result, it does not appear in a trial balance.
Question 28 Report
Which of the following is a prime cost?
Question 29 Report
Which of the following does not form part of shareholders fund?
Answer Details
Debenture does not form part of shareholders' fund. Shareholders' fund is the total amount of money that has been contributed by the shareholders of a company through the issue of ordinary shares and any additional paid-in capital through shares premium. It also includes the accumulated profits of the company that have not been distributed as dividends to the shareholders. Debenture, on the other hand, is a long-term debt instrument issued by a company to raise funds. Debenture holders are creditors of the company, and their investments do not give them ownership or control of the company. Therefore, debenture does not form part of shareholders' fund.
Question 31 Report
Where records maintained are inadequate to facilitate the preparation of a trading and profit and loss accounts, this is described as
Answer Details
When a business fails to keep adequate records that will enable it to prepare a trading and profit and loss account, this is known as incomplete records. Incomplete records refer to a situation where a business has not kept a complete record of all its financial transactions. It could be that the business has kept some records but not all, or the records are not properly organized, or they are missing altogether. This makes it difficult to determine the true financial position of the business and prepare a complete financial statement.
Question 32 Report
A ledger is a
Answer Details
A ledger is a principal book of accounts that contains a summary of all financial transactions of a business. It is used to record and classify transactions according to accounts, such as assets, liabilities, equity, revenue, and expenses. The ledger provides a complete record of each account's balance, which can be used to prepare financial statements, such as the balance sheet, income statement, and cash flow statement. Overall, the ledger serves as the central repository of a company's financial information, providing an organized and comprehensive view of its financial position and performance.
Question 33 Report
Which of the following reserves is not used for bonus shares?
Answer Details
Capital Redemption Reserve Fund is not used for bonus shares. Explanation: Bonus shares are new shares issued by a company to its existing shareholders without any additional cost, based on the accumulated profits of the company. These accumulated profits are generally taken from the company's reserves. The reserves that are typically used for issuing bonus shares are: 1. Capital Reserve: This reserve is created when a company sells its fixed assets or investments at a profit. 2. General Reserve: This reserve is created out of the company's profits and is not specifically earmarked for any purpose. 3. Share Premium: This is the amount received by the company over and above the face value of the shares issued. 4. Revaluation Reserve: This reserve is created when the value of the company's assets is revalued upwards. Capital Redemption Reserve Fund, on the other hand, is a reserve created out of the profits of the company to be used for the redemption of the company's redeemable preference shares or debentures. This reserve cannot be used for issuing bonus shares.
Question 34 Report
The collection and organization of data is
Answer Details
The collection and organization of data is known as data processing. This involves gathering raw data, organizing it into a structured format, and then using software or hardware tools to perform various operations on it, such as sorting, filtering, analyzing, or summarizing. Data processing is a crucial step in converting raw data into useful information, which can be used for decision-making, reporting, and other purposes. It is widely used in various fields such as business, science, engineering, medicine, and social sciences to manage and analyze large amounts of data efficiently and accurately.
Question 35 Report
Which of the following is the equivalent of the receipts payment accounts?
Answer Details
The equivalent of the receipts and payments account is the cash book. The cash book is a book of original entry where all cash transactions are recorded, including both receipts and payments. It is used to maintain a record of all cash transactions during a particular period, usually a month or a year. The cash book is important for determining the cash balance at the end of a period and is used in the preparation of the final accounts of an organization. Therefore, option (B) is the correct answer.
Question 36 Report
Which of the following is not an external user of accounting information?
Answer Details
Question 37 Report
Use the following information to answer the question given
\(\begin{array}{c|c} \text{Jan. 1} & \text{₦}\\ \hline \text{1/1/08 Capital introduced by cash} & 50,000 \\ \text{2/1/08 Bought goods for retail by cash} & 10,000\\ \text{3/1/08 Sold fixtures by cash} & 5,000\\ \text{4/1/08 Sold goods to Lagbaja on credit} & 3,000\\ \text{5/1/08 Bought goods on credit from Tamedu}& 8,000\end{array}\)
Cash balance at 5/1/08 is
Answer Details
Question 38 Report
Use the following information to answer the question given
\(\begin{array}{c|c} \text{Jan. 1} & \text{₦}\\ \hline \text{1/1/08 Capital introduced by cash} & 50,000 \\ \text{2/1/08 Bought goods for retail by cash} & 10,000\\ \text{3/1/08 Sold fixtures by cash} & 5,000\\ \text{4/1/08 Sold goods to Lagbaja on credit} & 3,000\\ \text{5/1/08 Bought goods on credit from Tamedu}& 8,000\end{array}\)
Balance in the Capital Account at 5/1/08 is
Question 39 Report
When shares are sold 'at par' it means they are issued at
Answer Details
When shares are sold 'at par', it means they are issued at their nominal or face value. The nominal value is the original value of the share as determined by the company at the time of its issue, and it is usually printed on the share certificate. So, selling shares 'at par' means the shares are being sold at the exact price at which they were originally issued, without any discount or premium added. In other words, the market value of the share at the time of sale is the same as its nominal value.
Question 40 Report
Use the following information to answer the given question, Aba and Baba are partners who agreed to share profits and losses in the ratio 4 : 3 respectively. Extracts from their books for the year ended 31/12/08 are:
\(\begin{array}{c|c} & \text{ABA} & \text{BABA} & \text{TOTAL}\\ & ₦ & ₦ & ₦ \\ \hline \text{Capital} & 20,000 & 15,000 & 35,000 \\ \text{Drawings} & 2,520 & - & 2,520 \\ \text{Interest on drawings} & 504 & - & 504\\ \text{Interest on capital} & 2,000 & 1,500 & 3,500 \\ \text{Net profit 31/12/08} & - & - & 34,636\end{array}\)
Aba's share of profit is
Answer Details
Question 41 Report
Use the following information to answer the given question
\(\begin{array}{c|c} \text{1/1/06 Debtors} & D2,600\\ \text{1/1/06 Provision for bad debts} & D60\\ \text{31/12/06 New provision provision for bad debts} & \text{5% on debtors}\end{array}\)
What is the amount of the new provision for bad debts?
Answer Details
The provision for bad debts is an amount set aside to cater for the possibility that some of the company's customers might not pay their debts. In this question, the provision for bad debts at the beginning of the year was given as D60, and the debtors were given as D2,600. The new provision for bad debts can be calculated by applying the given percentage (5%) to the amount of debtors at the end of the year. 5% of D2,600 = D130 Therefore, the new provision for bad debts at the end of the year is D130. So the correct answer is option A - D130.
Question 42 Report
The balance of the sales ledger control account represents
Answer Details
The balance of the sales ledger control account represents the total amount owed to a business by its customers, also known as total debtors. The sales ledger control account is a summary of all the transactions that have taken place in the individual customer accounts recorded in the sales ledger. Therefore, the balance of the sales ledger control account represents the total of all the outstanding customer balances. It is an important tool for a business in managing its accounts receivable and monitoring the overall health of its sales operations.
Question 43 Report
In the preparation of bank reconciliation statement cheque are
Question 44 Report
Use the following information to answer the given question
\(\begin{array}{c|c} \text{1/1/06 Debtors} & D2,600\\ \text{1/1/06 Provision for bad debts} & D60\\ \text{31/12/06 New provision provision for bad debts} & \text{5% on debtors}\end{array}\)
The provision for bad debts in the profit and loss account is
Answer Details
The provision for bad debts is the estimated amount of debts that are not likely to be recovered by a business from its customers. In this question, the provision for bad debts on 1/1/06 is given as D60. On 31/12/06, a new provision for bad debts is created which is calculated as 5% on debtors (the amount owed by customers to the business). The debtors on 1/1/06 are D2,600. Therefore, the new provision for bad debts on 31/12/06 would be 5% of D2,600 which is D130. To calculate the provision for bad debts in the profit and loss account, we need to find the increase in provision from 1/1/06 to 31/12/06. This is calculated as: New provision for bad debts - Old provision for bad debts = D130 - D60 = D70 Therefore, the provision for bad debts in the profit and loss account is D70. Option (D) is the correct answer.
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