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Question 1 Report
Which of the following is not contained in the sales ledger control account?
Answer Details
The option that is not contained in the sales ledger control account is returns outwards. A sales ledger control account is a summary of all transactions in the sales ledger, which is a record of all credit sales made by a company. The purpose of the sales ledger control account is to provide a summary of the sales ledger and to ensure that the balance of the sales ledger agrees with the total of the individual customer accounts in the ledger. The sales ledger control account includes the following information: - Total sales made to customers on credit - Receipts from debtors (i.e., customers who have paid their accounts) - Returns inwards (i.e., goods returned by customers) - Dishonoured cheques (i.e., cheques that were not honoured by the bank) - Discounts allowed to customers for prompt payment However, returns outwards (i.e., goods returned to suppliers) are not included in the sales ledger control account. This is because returns outwards are not related to credit sales made to customers, but rather to purchases made by the company. Returns outwards are recorded in the purchases ledger control account instead.
Question 2 Report
Use the following information to answer the given question.
\(\begin{array}{c|c} & & N \\ \hline \text{Purchases:} & \text{raw materials} & 20,000 \\ & \text{finished goods} & 15,200 \\ \text{Stock 1/1/89:} & \text{ raw materials} & 3,000 \\ & \text{work-in-progress} & 2,500 \\ Wages: & direct & 22,800 \\ & indirect & 7,200 \\ \text{Factory expenses:} & electricity & 12,000 \\ & insurance & 2,000 \\ \text{Stock 31/12/89:} & \text{raw materials} & 4,000 \\ & \text{work-in-progress} & 4,500\end{array}\)
What is the value of raw materials available?
Answer Details
Question 4 Report
Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{10,000 ordinary shares of N1 each} & N10,000\\ \text{5,000 5% preference shares of N1 each} & N5,000 \\ \text{Profit and loss account} & N8,000 \\ \text{8% debenture} & 10,000 \\ creditors & 3,000 \\ \text{Bank overdraft} & 2,000 \\ \text{Plants and machinery} & 10,000 \\ \text{Plant and machinery} & 10,000 \\ \text{Furniture and fittings} & 8,000 \\ stock & 8,000 \\ debtors & 5,000 \end{array}\)
What is the total value of long term liability?
Answer Details
Question 5 Report
Purchases in accounting refers to goods bought for
Answer Details
In accounting, purchases refer to goods bought for resale. Purchases are a type of expense that is incurred by a business when it buys goods or merchandise to be sold to customers. These goods are typically bought at a cost, which is the price paid to the supplier or manufacturer. Once purchased, the goods become part of the business's inventory, and are held until they are sold to customers. The main purpose of purchases in accounting is to calculate the cost of goods sold (COGS), which is an important expense that must be reported on a company's income statement. COGS is calculated by subtracting the value of the remaining inventory at the end of the accounting period from the cost of goods purchased during the period. The result is the cost of goods sold during the period. Purchases in accounting do not refer to goods bought for repairs, decorating offices, or permanent use, as these expenses are not related to the primary purpose of a business, which is to sell goods or services to customers. Additionally, purchases do not refer to goods bought for the owner's use, as these goods are considered personal expenses and are not deductible for tax purposes.
Question 6 Report
Which of the following does not belong to the group?
Answer Details
The item that does not belong to the group is "overdraft". The first four options - plant and machinery, stock, goodwill, and preliminary expenses - are all assets in accounting. - Plant and machinery refer to the fixed assets that a company uses to produce goods or services. - Stock refers to the goods or merchandise that a company has in its inventory to be sold to customers. - Goodwill is an intangible asset that represents the value of a company's reputation, customer relationships, and brand. - Preliminary expenses refer to the costs incurred by a company during its startup phase, such as legal and accounting fees. On the other hand, an overdraft is a liability in accounting. It is a type of borrowing arrangement in which a bank allows a company to withdraw more money than it has in its account, up to a certain limit. An overdraft is a short-term source of funding that is typically used to cover cash flow shortages or unexpected expenses. Therefore, overdraft is the item that does not belong to the group of assets.
Question 7 Report
Cash stolen from branch-taking s is recorded in the Head Office books by debiting
Answer Details
Cash stolen from a branch is considered a loss for the company. Therefore, the Head Office would record the loss in their books of accounts. To record the cash stolen from a branch in the Head Office books, the following entry is made: Debit Defalcations Account (a nominal account which records losses) Credit Branch Stock Account (a personal account which records the stock of the branch) This entry reduces the stock of the branch and records the loss in the Defalcations Account. By recording the loss in the Defalcations Account, it is properly classified as an expense in the profit and loss account, which ultimately reduces the profit for the year. Therefore, the correct answer is to debit Defalcations Account and credit Branch Stock Account. Answer (A) is correct. In summary, cash stolen from a branch is recorded in the Head Office books by debiting Defalcations Account and crediting Branch Stock Account.
Question 8 Report
Which of the following is the most liquid?
Answer Details
Out of the options given, cash at bank is the most liquid asset. Liquidity refers to how easily and quickly an asset can be converted into cash without losing its value. In other words, it is the ability of an asset to be turned into cash quickly and easily. Cash at bank is the most liquid asset because it can be easily accessed and used to pay for goods and services or to meet financial obligations. Other assets like land and buildings, machinery, goodwill, and furnitures and fittings are not as easily convertible to cash. Land and buildings, for example, may take a long time to sell and may not fetch a fair price in an emergency situation. Machinery may also take time to sell and may not be in high demand when it is put up for sale. Goodwill, which is the intangible value of a business, cannot be sold separately from the business, and it may take time to find a buyer for the business. Furnitures and fittings may be sold quickly, but they may not fetch a fair price in an emergency situation. Therefore, cash at bank is the most liquid asset out of the options given because it is readily available and easily convertible to cash when needed.
Question 9 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
Interest on John's drawings is
Answer Details
To calculate the interest on John's drawings, we first need to find out his capital account balance at the end of the accounting period. John's initial capital is N20,000, and he made drawings of N2,000. Therefore, his capital at the end of the period will be: N20,000 - N2,000 = N18,000 Next, we need to calculate the interest on John's drawings at a rate of 10%. The formula for calculating interest on drawings is: Interest on Drawings = Drawings x Rate of Interest So, for John, the interest on his drawings will be: N2,000 x 10% = N200 Therefore, the answer is N200.
Question 10 Report
The books of accounts are opened by means of a
Answer Details
Books of accounts are typically opened by means of a principle journal, which is also known as the general journal. The principle journal is a book in which all financial transactions of a business are recorded in chronological order. These transactions include sales, purchases, returns, expenses, and other financial events. The principle journal serves as the primary record of a company's financial activities, and it is used to create other financial reports such as balance sheets and income statements. Each entry in the principle journal includes a date, a description of the transaction, and the amount of money involved. While there are other journals that may be used for specific types of transactions, such as the sales journal for recording sales or the purchases journal for recording purchases, the principle journal is the starting point for all financial transactions and is therefore considered the most important book of accounts.
Question 11 Report
The amount of individual items on a government budget is called
Answer Details
The amount of individual items on a government budget is called a vote. A government budget is a financial plan that outlines the projected revenues and expenditures of the government for a given period. The budget is usually divided into different sections or categories, which are referred to as votes. Each vote represents a specific area of government spending, such as health, education, defense, or infrastructure. The amount of money allocated for each vote is known as the vote amount. Therefore, a vote refers to the specific amount of money allocated for a particular area of government spending, while a government budget is the overall financial plan for the government's operations. Votes are often debated and approved by the legislative body of the government, which ensures that the funds are spent in accordance with the priorities of the government and the needs of the citizens.
Question 12 Report
Carriage inwards are
Answer Details
Carriage inwards refers to the transportation cost incurred in bringing goods purchased into the company's premises. When accounting for these costs, they are typically treated as an expense and are therefore debited to the trading account. This means that they reduce the gross profit and ultimately affect the net profit of the company. Therefore, "debited to the trading account" is the correct answer.
Question 13 Report
Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{10,000 ordinary shares of N1 each} & N10,000\\ \text{5,000 5% preference shares of N1 each} & N5,000 \\ \text{Profit and loss account} & N8,000 \\ \text{8% debenture} & 10,000 \\ creditors & 3,000 \\ \text{Bank overdraft} & 2,000 \\ \text{Plants and machinery} & 10,000 \\ \text{Plant and machinery} & 10,000 \\ \text{Furniture and fittings} & 8,000 \\ stock & 8,000 \\ debtors & 5,000 \end{array}\)
What is the amount share capital?
Answer Details
The total amount of share capital can be calculated by adding the value of ordinary shares and preference shares. Ordinary shares: 10,000 shares x N1 per share = N10,000 Preference shares: 5,000 shares x N1 per share = N5,000 Therefore, the total amount of share capital is N10,000 + N5,000 = N15,000. Hence, the correct answer is: N15,000.
Question 14 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
The interest on Johnson's capital is
Answer Details
To calculate the interest on Johnson's capital, we need to first determine the amount of his capital in the business. From the given information, we know that Johnson's capital is N10,000. Next, we need to calculate the interest on his capital at a rate of 5%. To do this, we can use the simple interest formula: Interest = (Principal x Rate x Time)/100 Here, the principal is the amount of Johnson's capital, which is N10,000. The rate is 5%, and we need to convert it to a decimal by dividing by 100, giving us 0.05. The time is not given explicitly, but we can assume that it is for the entire year, as this is a standard assumption in accounting. Therefore, the time is 1 year. Substituting these values into the formula, we get: Interest = (10000 x 0.05 x 1)/100 = N500 Therefore, the interest on Johnson's capital is N500. Answer (E) is correct. In summary, we calculated the interest on Johnson's capital by using the simple interest formula, which takes into account the principal, rate, and time. We assumed that the time was for the entire year and found that the interest on Johnson's capital was N500.
Question 15 Report
Trade debts amounting to N300 were written off. Which of the following would be affected?
Answer Details
Question 16 Report
The excess of current assets over current liabilities is
Answer Details
The excess of current assets over current liabilities is called working capital. Current assets are the assets that can be easily converted into cash within a year, such as cash in hand, inventory, and accounts receivables. Current liabilities, on the other hand, are the short-term obligations that a company has to pay within a year, such as accounts payable and short-term loans. Working capital is an important measure of a company's short-term financial health. If the current assets are greater than the current liabilities, it indicates that the company has sufficient funds to meet its short-term obligations. In other words, it has a positive working capital. On the other hand, if the current liabilities exceed the current assets, it indicates that the company may face liquidity issues and has a negative working capital. In conclusion, working capital is the excess of current assets over current liabilities, and it indicates a company's ability to meet its short-term obligations.
Question 17 Report
A trial balance is a proof of accuracy of
Answer Details
A trial balance is a proof of accuracy of double entry in the ledger. Double entry means that for every transaction recorded in the ledger, there should be at least two accounts affected - a debit account and a credit account. A trial balance is a list of all the account balances in the ledger, separated by their respective debit or credit sides. The total of all debit balances should be equal to the total of all credit balances. If they are not equal, it indicates that there is an error in the double entry, and the trial balance is said to be "unbalanced". Therefore, a balanced trial balance is an indication that all the transactions recorded in the ledger have been accurately entered in the appropriate accounts, thus serving as a proof of accuracy of double entry in the ledger.
Question 19 Report
Income received in advance is shown in the balance sheet as
Question 20 Report
Use the following information to answer the given question.
\(\begin{array}{c|c} & & N \\ \hline \text{Purchases:} & \text{raw materials} & 20,000 \\ & \text{finished goods} & 15,200 \\ \text{Stock 1/1/89:} & \text{ raw materials} & 3,000 \\ & \text{work-in-progress} & 2,500 \\ Wages: & direct & 22,800 \\ & indirect & 7,200 \\ \text{Factory expenses:} & electricity & 12,000 \\ & insurance & 2,000 \\ \text{Stock 31/12/89:} & \text{raw materials} & 4,000 \\ & \text{work-in-progress} & 4,500\end{array}\)
The amount of factory overhead is
Answer Details
Question 22 Report
Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{10,000 ordinary shares of N1 each} & N10,000\\ \text{5,000 5% preference shares of N1 each} & N5,000 \\ \text{Profit and loss account} & N8,000 \\ \text{8% debenture} & 10,000 \\ creditors & 3,000 \\ \text{Bank overdraft} & 2,000 \\ \text{Plants and machinery} & 10,000 \\ \text{Plant and machinery} & 10,000 \\ \text{Furniture and fittings} & 8,000 \\ stock & 8,000 \\ debtors & 5,000 \end{array}\)
What is the value of shareholder's equity?
Question 23 Report
Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{10,000 ordinary shares of N1 each} & N10,000\\ \text{5,000 5% preference shares of N1 each} & N5,000 \\ \text{Profit and loss account} & N8,000 \\ \text{8% debenture} & 10,000 \\ creditors & 3,000 \\ \text{Bank overdraft} & 2,000 \\ \text{Plants and machinery} & 10,000 \\ \text{Plant and machinery} & 10,000 \\ \text{Furniture and fittings} & 8,000 \\ stock & 8,000 \\ debtors & 5,000 \end{array}\)
What is the total amount of fixed assets?
Question 24 Report
Interest on Johnson's drawing is
Question 25 Report
Abdul paid off his indebtedness to John by cash. The accounting entries in Abdul's books are: debt
Answer Details
Question 26 Report
shares are sold at less than nominal value. They are issued at a
Answer Details
When shares are issued, they have a nominal value, also known as par value, which represents the minimum price at which the shares can be issued. If shares are sold at a price lower than the nominal value, it is referred to as selling them at a discount. This means that the company is essentially selling the shares for less than what they are technically worth on paper. This may happen for various reasons, such as to raise funds quickly, to incentivize investors to buy the shares, or to clear unsold shares. On the other hand, selling shares at a price higher than the nominal value is known as selling them at a premium. This could occur when the demand for the shares is high, and investors are willing to pay more to get a piece of the company. So, in summary, shares sold at less than the nominal value are issued at a discount.
Question 27 Report
Use the following information to answer the given question
\(\begin{array}{c|c} \text{Rent paid 31/12/89} & N4,000\\ \text{Rent owing 1/1/89} & N500 \\ \text{Rent owing 31/12/89} & N300\end{array}\)
Rent for 1989 amounts to
Question 29 Report
Mark-up on goods sent to branch offices are recorded in the books by creating
Answer Details
When goods are sent to a branch office, the cost of those goods needs to be recorded in the books of the main office. This is done by creating an entry in the accounts that debits the branch stock account and credits either the stock adjustment account or the goods sent to branch account. The stock adjustment account is used when the goods are being sent to the branch at a markup, which means they are being sold to the branch at a higher price than they cost the main office. The difference between the cost and the selling price is the markup, and this is recorded in the stock adjustment account. The goods sent to branch account is used when the goods are being sent to the branch at cost, which means they are being sold to the branch at the same price that they cost the main office. In this case, there is no markup, so the goods sent to branch account is used instead of the stock adjustment account. Either way, the branch stock account is debited to record the fact that the goods have been sent to the branch and are now part of its inventory. Option D (cash account and crediting branch stock account) and option E (branch stock account and crediting defalcations account) are not correct because they do not reflect the actual transaction of goods being sent to the branch at a markup or at cost.
Question 30 Report
Which of the following is a fictitious asset?
Answer Details
A fictitious asset is an asset that does not have any physical existence but is recorded on the balance sheet of a company. Out of the options given, "preliminary expenses" can be considered a fictitious asset. Preliminary expenses refer to the expenses incurred by a company in the early stages of its formation or expansion, such as legal fees, registration fees, and expenses related to issuing shares. These expenses are not tangible assets like machinery or investments but are still recorded as assets on the balance sheet. However, it is important to note that preliminary expenses are not a realizable asset, meaning they cannot be converted into cash or sold. They are treated as intangible assets and are gradually written off over a period of time.
Question 32 Report
The equivalent of a club's Receipt and payment account is
Answer Details
The equivalent of a club's Receipt and Payment account is a Cash Account. A club's Receipt and Payment account is a summary of all the cash and bank transactions made during a particular period, typically a year. It includes all the cash and bank receipts and payments made by the club, irrespective of the nature of the transaction, such as subscriptions received from members, rent collected, wages paid, etc. Similarly, a Cash Account is a summary of all the cash transactions made by an entity during a particular period. It includes all the cash receipts and payments made by the entity, such as sales receipts, rent collected, wages paid, etc. Therefore, a club's Receipt and Payment account and a Cash Account serve the same purpose of summarizing all the cash transactions made during a particular period.
Question 33 Report
Use the following information to answer the given question.
\(\begin{array}{c|c} & & N \\ \hline \text{Purchases:} & \text{raw materials} & 20,000 \\ & \text{finished goods} & 15,200 \\ \text{Stock 1/1/89:} & \text{ raw materials} & 3,000 \\ & \text{work-in-progress} & 2,500 \\ Wages: & direct & 22,800 \\ & indirect & 7,200 \\ \text{Factory expenses:} & electricity & 12,000 \\ & insurance & 2,000 \\ \text{Stock 31/12/89:} & \text{raw materials} & 4,000 \\ & \text{work-in-progress} & 4,500\end{array}\)
The cost of materials used is
Answer Details
The cost of materials used can be calculated using the following formula: Cost of materials used = Purchases + Stock 1/1/89 - Stock 31/12/89 Substituting the given values, we get: Cost of materials used = 20,000 + 3,000 - 4,000 = 19,000 Therefore, the cost of materials used is N19,000 (Option D). This represents the total cost of raw materials used in the manufacturing process during the year, after accounting for the opening and closing stock of raw materials.
Question 34 Report
Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{10,000 ordinary shares of N1 each} & N10,000\\ \text{5,000 5% preference shares of N1 each} & N5,000 \\ \text{Profit and loss account} & N8,000 \\ \text{8% debenture} & 10,000 \\ creditors & 3,000 \\ \text{Bank overdraft} & 2,000 \\ \text{Plants and machinery} & 10,000 \\ \text{Plant and machinery} & 10,000 \\ \text{Furniture and fittings} & 8,000 \\ stock & 8,000 \\ debtors & 5,000 \end{array}\)
What is the value of current liability?
Answer Details
To calculate the current liabilities, we need to consider the liabilities that are expected to be paid within the next 12 months. From the given information, the following items can be considered as current liabilities: 1. Creditors: N3,000 2. Bank overdraft: N2,000 Therefore, the total current liabilities are N3,000 + N2,000 = N5,000. Hence, the correct answer is N5,000.
Question 35 Report
Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{10,000 ordinary shares of N1 each} & N10,000\\ \text{5,000 5% preference shares of N1 each} & N5,000 \\ \text{Profit and loss account} & N8,000 \\ \text{8% debenture} & 10,000 \\ creditors & 3,000 \\ \text{Bank overdraft} & 2,000 \\ \text{Plants and machinery} & 10,000 \\ \text{Plant and machinery} & 10,000 \\ \text{Furniture and fittings} & 8,000 \\ stock & 8,000 \\ debtors & 5,000 \end{array}\)
What is the total of current assets?
Question 36 Report
Debenture is a
Answer Details
A debenture is a long-term loan that a company borrows from the public, usually with a fixed interest rate and a specified repayment date. It is a form of a bond that is not backed by any specific asset or collateral. Debentures are considered long-term liabilities on the company's balance sheet, meaning that they will be paid off over a period of several years. In summary, debentures are a type of long-term loan that a company takes out to finance its operations, and they are classified as long-term liabilities on the balance sheet.
Question 37 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
What is John's share of the profit?
Answer Details
Question 38 Report
Use the following information to answer the given question.
\(\begin{array}{c|c} & & N \\ \hline \text{Purchases:} & \text{raw materials} & 20,000 \\ & \text{finished goods} & 15,200 \\ \text{Stock 1/1/89:} & \text{ raw materials} & 3,000 \\ & \text{work-in-progress} & 2,500 \\ Wages: & direct & 22,800 \\ & indirect & 7,200 \\ \text{Factory expenses:} & electricity & 12,000 \\ & insurance & 2,000 \\ \text{Stock 31/12/89:} & \text{raw materials} & 4,000 \\ & \text{work-in-progress} & 4,500\end{array}\)
The cost of manufacturing goods is
Answer Details
Question 39 Report
Use the following information to answer the given question.
\(\begin{array}{c|c} & & N \\ \hline \text{Purchases:} & \text{raw materials} & 20,000 \\ & \text{finished goods} & 15,200 \\ \text{Stock 1/1/89:} & \text{ raw materials} & 3,000 \\ & \text{work-in-progress} & 2,500 \\ Wages: & direct & 22,800 \\ & indirect & 7,200 \\ \text{Factory expenses:} & electricity & 12,000 \\ & insurance & 2,000 \\ \text{Stock 31/12/89:} & \text{raw materials} & 4,000 \\ & \text{work-in-progress} & 4,500\end{array}\)
The prime cost is
Answer Details
Question 40 Report
The term bad debts means debts
Answer Details
The term bad debts refers to debts that cannot be collected by a business or individual. When a business extends credit to its customers, it is expected that the customers will repay the amount owed in a timely manner. However, in some cases, the customers may default on the payment or become unable to pay due to insolvency or bankruptcy. These unpaid debts are referred to as bad debts. It is important for businesses to recognize bad debts as an expense in their accounting books so that they can reflect the true financial position of the company. Bad debts are usually written off as a loss in the income statement, which reduces the taxable income of the business. The other options listed are not correct definitions of bad debts. A debt recorded in the wrong account can be corrected with a journal entry, and a debt owed by an employee or supplier is not necessarily a bad debt if it is still expected to be paid. A debt paid with fake currency is a fraudulent transaction, not a bad debt, as it was never a legitimate debt in the first place.
Question 41 Report
A share is under-subscribed when
Answer Details
A share is a unit of ownership in a company that represents a proportionate claim on its assets and earnings. A company may issue new shares to the public to raise capital for various purposes. When shares are issued, they are offered for subscription to the public at a certain price, known as the issue price. The total number of shares offered is also specified. When the number of shares applied for is less than the total number of shares offered, the issue is said to be under-subscribed. This means that there is a shortfall in the demand for the shares, and the company may not be able to raise the full amount of capital it had hoped for. In this situation, the company may have to cancel the issue, or it may have to find other ways to raise the required capital. Therefore, when the number of shares applied for is less than the offer, the issue is under-subscribed. Answer (C) is correct. In summary, a share issue is said to be under-subscribed when the number of shares applied for is less than the total number of shares offered.
Question 42 Report
which of the following is not a Nominal Account?
Answer Details
Nominal Accounts are those accounts that record all revenues, expenses, gains, and losses incurred by a business. The purpose of these accounts is to calculate the net profit or loss of the business. Out of the given options, "Land" is not a Nominal Account. It is a Real Account, which records all assets owned by a business, including land, buildings, machinery, etc. Real Accounts are used to track changes in assets, which are expected to provide economic benefits to the business over a long period. On the other hand, Rent, Wages, Discount, and Interest are all examples of Nominal Accounts. Rent is an expense account that records the cost of renting a property for business purposes. Wages are an expense account that records the cost of paying employees for their services. Discount is an income account that records any discounts received or given by a business. Interest is an expense account that records the cost of borrowing money or interest paid on loans. In summary, Land is not a Nominal Account as it is a Real Account that records the assets owned by a business. The other options, Rent, Wages, Discount, and Interest, are all Nominal Accounts as they record expenses, incomes, gains, and losses incurred by a business.
Question 43 Report
Gavon. Ltd. failed to record N2,000 wages. The error committed is that of
Answer Details
The error committed by Gavon Ltd. of failing to record N2,000 wages is an example of omission. Omission refers to a situation where a transaction is completely left out or forgotten in the accounting records. In this case, the company failed to record the wages of N2,000, which means that it was not included in the company's financial statements, making them incomplete and inaccurate. This is different from commission, which refers to a situation where a transaction is recorded but with an incorrect amount or account. The principle refers to a fundamental rule or concept that guides accounting practices, while compensation refers to payment or benefits given to employees. Original entry refers to the initial record made in the accounting system for a transaction.
Question 44 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
Interest on Johnson's drawing is?
Answer Details
To calculate the interest on Johnson's drawings, we first need to determine the total amount of his drawings. From the given information, we know that Johnson's drawings were N3,000. Next, we need to calculate the interest on his drawings at a rate of 10%. To do this, we can use the simple interest formula: Interest = (Principal x Rate x Time)/100 Here, the principal is the amount of Johnson's drawings, which is N3,000. The rate is 10%, and we need to convert it to a decimal by dividing by 100, giving us 0.1. The time is not given explicitly, but we can assume that it is for the entire year, as this is a standard assumption in accounting. Therefore, the time is 1 year. Substituting these values into the formula, we get: Interest = (3000 x 0.1 x 1)/100 = N300 Therefore, the interest on Johnson's drawings is N300. Answer (B) is correct. In summary, we calculated the interest on Johnson's drawings by using the simple interest formula, which takes into account the principal, rate, and time. We assumed that the time was for the entire year and found that the interest on Johnson's drawings was N300.
Question 45 Report
Goodwill is
Answer Details
Goodwill is an intangible asset. An asset is something that a company owns or controls that has value and can be used to generate future economic benefits. Goodwill is an intangible asset that represents the value of a company's reputation, customer base, brand name, and other intangible factors that contribute to its overall value. Goodwill is created when a company pays more than the fair value of another company's net assets in a merger or acquisition. Goodwill is considered an intangible asset because it cannot be touched or seen, but it still has value to the company. Goodwill is not a current asset or a current liability because it is not expected to be used up or paid off within the current operating cycle of the company. It is not a long-term liability because it does not represent a debt that the company owes to someone else. Goodwill is often listed as a separate line item on a company's balance sheet, and it is subject to periodic impairment tests to determine whether its value has declined over time.
Question 46 Report
An excess of the value of the assets over the purchases consideration for acquisition of business is credited to
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Question 47 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
The balance on John's current account is
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Question 48 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
What is Johnson's share of the profit?
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Question 49 Report
Which of the following is a credit item on an income and expenditure account?
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A credit item on an income and expenditure account represents income or revenue received by an organization. Of the options provided, the credit item is subscription. A subscription is a regular payment made by members or subscribers of an organization to support its activities. For example, a membership fee paid by members of a club or a subscription fee paid by subscribers of a magazine. Subscription income is recorded as a credit item on the income and expenditure account because it represents money received by the organization. The other options listed are expenses incurred by the organization and are therefore debit items on the income and expenditure account. Bar expenses represent the cost of drinks and refreshments provided by the organization, electricity represents the cost of electricity used by the organization, salaries represent the wages paid to employees, and rates represent taxes or fees paid to the government or other authorities.
Question 50 Report
Use the following information to answer the given question.
John and Johnson are in partnership, sharing profit and losses in the ratio 3 : 2. Other information are as follows:
\(\begin{array}{c|c} \text{Capital} & \text{ - John} & N20,000 \\ & \text{ - Johnson} & N10,000 \\ Drawings & \text{ - John} & 2,000 \\ & \text{ - Johnson} & 3,000 \\ \text{Interest on capital} & & \text{5%} \\ \text{Interest on drawings} & & \text{10%} \\ Profit & & N6,000\end{array}\)
The balance on Johnson's current account is
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Question 51 Report
Which of the following does not belong to the group?
Answer Details
The item that does not belong to the group is "return inwards". All the other items are expenses or costs that a business incurs in its operations, while "return inwards" refers to the goods that have been returned to the business by customers, which is a revenue or income item.
Question 52 Report
Which of the following accounts is not kept by a local government?
Answer Details
The account that is not kept by a local government is the profit and loss account. A profit and loss account is an account used by businesses to record their income, expenses, gains, and losses over a given period of time, usually a fiscal year. This account is used to calculate the net profit or loss of a business. Local governments, on the other hand, are not businesses and do not have a profit motive. Instead, they are public entities responsible for providing services to their communities. Therefore, they do not keep a profit and loss account. The other accounts listed are commonly used by local governments. The departmental votes revenue account is used to record the income received by different departments or units of the local government. The departmental votes expenditure account is used to record the expenses incurred by different departments or units of the local government. The deposit account is used to record money held by the local government in a bank account. The advances account is used to record any payments made in advance of goods or services being received.
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