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gce2025accounting
Q1. A quality of accounting information is that it should be
Aprofitable
Bverifiable
Cappreciable
Ddepreciable
Correct Answer: B
Verifiability is a fundamental qualitative characteristic of accounting information, ensuring that claims can be verified by independent observers.
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Q2. The balance on the sales account is transferred to the trading account by
Adebiting the sales account
Bcrediting the sales account
Cdebiting the customer's account
Dcrediting the customer's account
Correct Answer: A
The sales account has a credit balance, which is transferred to the credit side of the trading account by debiting the sales account.
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Q3. Depletion method of depreciation is applicable to
Aquarries
Bplant and machinery
Clivestock
Doffice equipment
Correct Answer: A
The depletion method is used for wasting assets like quarries, mines, and natural resources, based on the units extracted.
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Q4. Use the following information to answer this question. Balance as per bank statement 1/2/2021: ₦30,000. Cheque of ₦90,000 issued on 20/2/2021 O/D to Bank. Cheques of ₦40,000 issued on 22/2/2021 and credited by the bank on 8/3/2021. The balance as per the adjusted cash book 28/2/2021 is
A₦100,000 DR
B₦100,000 CR
C₦80,000 DR
D₦80,000 CR
Correct Answer: A
Opening balance ₦30,000 - ₦90,000 - ₦40,000 = -₦100,000 (overdraft, shown as debit balance in cash book).
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Q5. Use the following information to answer this question. Balance as per bank statement 1/2/2021: ₦30,000. Cheque of ₦90,000 issued on 20/2/2021 O/D to Bank. Cheques of ₦40,000 issued on 22/2/2021 and credited by the bank on 8/3/2021. The balance as per the adjusted cash book on 28/2/2021 means that the
Abusiness is owing the bank
Bbusiness owns the amount in the bank
Cbank is owing the business
Dbusiness made a surplus
Correct Answer: A
A debit balance of ₦100,000 in the cash book indicates an overdraft, meaning the business owes the bank.
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Q6. When there is provision for depreciation, fixed assets are shown in the balance sheet at
Aappraised value
Bnet book value
Cappreciated value
Dcost value
Correct Answer: B
Fixed assets are shown at cost less accumulated depreciation, which is the net book value.
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Q7. Use the following information to answer this question. Opening stock: 9,220; Sales outwards: 66,930; Returns inwards: 1,740; Gross profit: 16,000; Purchases: 60,540. The cost of goods sold is
A64,000
B53,860
C50,930
D49,190
Correct Answer: D
Net sales = 66,930 - 1,740 = 65,190. Cost of goods sold = Net sales - Gross profit = 65,190 - 16,000 = 49,190.
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Q8. Use the following information to answer this question. Opening stock: 9,220; Sales outwards: 66,930; Returns inwards: 1,740; Gross profit: 16,000; Purchases: 60,540. The closing stock is
A20,570
B16,000
C14,620
D9,220
Correct Answer: A
Closing stock = Opening stock + Purchases - Cost of goods sold = 9,220 + 60,540 - 49,190 = 20,570.
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Q9. Use the following information to answer this question. Opening stock: 9,220; Sales outwards: 66,930; Returns inwards: 1,740; Gross profit: 16,000; Purchases: 60,540. The rate of stock turnover is
Q10. Which of the following expenses forms part of cost of production?
ASelling expenses
BAdministrative expenses
CDirect expenses
DGeneral expenses
Correct Answer: C
Direct expenses, such as direct materials and labor, are part of the prime cost in production.
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Q11. Purchases ledger control account is a summary of
Acreditors ledger
Bdebtors control account
Csundry debtors
Dsundry creditors
Correct Answer: A
The purchases ledger control account summarizes the creditors ledger, showing total owed to suppliers.
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Q12. The balance brought down on the credit side of the sales ledger control account at the beginning of a period represents the
Aamount owed by the customers
Bset-off for the month
Cprofit of the business
Damount owed to the suppliers
Correct Answer: A
The credit balance in the sales ledger control account represents the total amount owed by customers (debtors).
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Q13. The starting point for the preparation of accounts from incomplete records is to
Aprepare an opening statement of affairs
Bverify the total purchases
Cascertain the opening stock of goods sold
Dascertain the total turnover
Correct Answer: A
An opening statement of affairs is prepared to determine the opening capital in single entry or incomplete records.
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Q14. Use the following information to answer this question. Opening capital: 10,800; Drawings: 2,500; Trade creditors: 2,560; Trade debtors: 2,880; Cash-in-hand: 1,000; Net profit: 6,000. The closing capital is
A16,800
B14,300
C8,300
D7,300
Correct Answer: B
Closing capital = Opening capital + Net profit - Drawings = 10,800 + 6,000 - 2,500 = 14,300.
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Q15. Use the following information to answer this question. Opening capital: 10,800; Drawings: 2,500; Trade creditors: 2,560; Trade debtors: 2,880; Cash-in-hand: 1,000; Net profit: 6,000. The working capital is
A5,800
B3,880
C3,500
D1,320
Correct Answer: D
Working capital = Current assets - Current liabilities = (2,880 + 1,000) - 2,560 = 1,320.
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Q16. When the total of the debit side of income and expenditure account exceeds the credit side, the difference is
Adeficit
Bsurplus
Ccash-in-hand
Daccumulated fund
Correct Answer: A
A debit excess in the income and expenditure account represents a deficit (loss).
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Q17. Use the following information to answer this question. Prime cost of production: 80,000; Opening work-in-progress: 35,000; Cost of production: 20,000. The closing work-in-progress is
A115,000
B95,000
C55,000
D45,000
Correct Answer: B
Closing work-in-progress = Opening work-in-progress + Prime cost - Cost of production = 35,000 + 80,000 - 20,000 = 95,000. (Fixed assuming typing error in original cost of production figure.)
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Q18. Use the following information to answer this question. Prime cost of production: 80,000; Opening work-in-progress: 35,000; Cost of production: 20,000. The work-in-progress for the year shows
Q19. In the absence of a partner, interest on capital would attract
Azero interest per annum
Binterest at 10% per annum
Cinterest at 5% per annum
Dinterest at 7% per annum
Correct Answer: A
Without a specific agreement, no interest is charged or allowed on capital in the absence of a partner.
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Q20. The interest at 7% per annum on furniture for office use of 290,000 should be debited to
Acash account
Bpurchases account
Cassets account
Dexpenses account
Correct Answer: D
Interest on furniture (e.g., finance cost) is treated as an expense and debited to the expenses account.
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Q21. The total of the bank discount column of $60,000 on the credit side of a cash book was credited to the discount allowed account. To correct this error, debit
ADiscount Allowed Account 60,000
BDiscount Received Account 60,000
CDiscount Received Account 120,000 and credit Discount Allowed Account 120,000
DDiscount Allowed Account 120,000 and credit Discount Received Account 120,000
Correct Answer: A
The discount received was wrongly credited to discount allowed; correct by debiting discount allowed and crediting discount received by $60,000.
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gce2025accounting
Q22. An item debited to the income and expenditure account is
Arent paid
Blife membership fees
Cprofit on bar
Ddonations received
Correct Answer: A
Rent paid is an expense debited to the income and expenditure account; others are income or capital receipts.
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Q23. Goods taken over by the owner of the business for personal use is treated as
Aallowances
Bloan
Csales
Ddrawings
Correct Answer: D
Owner's withdrawals of goods for personal use are recorded as drawings.
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Q24. Gross profit is computed as
Acost of sales plus net profit
Bcost of sales less net profit
Csales less cost of sales
Dsales less gross profit
Correct Answer: C
Gross profit = Net sales - Cost of goods sold.
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Q25. A feature of the income and expenditure account is that
Athe account records fixed assets
Bthe opening balance is shown on the account
Cit is prepared on cash basis
Dit is prepared on accrual basis
Correct Answer: D
The income and expenditure account is prepared on the accrual basis, matching revenues and expenses to the period.
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Q26. A person whose name is to be used as a partner without any contribution of capital is a
Adormant partner
Bactive partner
Climited partner
Dnominal partner
Correct Answer: D
A nominal partner lends their name to the business without contributing capital or sharing profits.
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Q27. The concept which states that there are two sides to accounting entries is
Amoney measurement concept
Bprudence concept
Cdual aspect concept
Daccrual concept
Correct Answer: C
The dual aspect concept states that every transaction affects two accounts, with debit equal to credit.
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Q28. Trade debtors are
Agoods sold on credit
Bsuppliers who are owed for goods delivered
Ccustomers who bought goods regularly
Dcustomers who bought goods on credit
Correct Answer: D
Trade debtors are customers to whom goods have been sold on credit.
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Q29. When the buyer is undercharged for goods delivered, the seller forwards
Acredit note
Bdebit note
Can invoice
Da receipt
Correct Answer: B
A debit note is issued by the seller to correct an undercharge and recover the additional amount.
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Q30. Use the following information to answer this question. Capital: Abu GH¢40,000, Ojo GH¢20,000; Drawings: Abu GH¢18,000, Ojo GH¢12,000. Profit for the year GH¢54,000 with 5% interest on capital and profit sharing ratio 3:2. Abu's share of profit is
AGH¢32,400
BGH¢30,600
CGH¢21,600
DGH¢20,400
Correct Answer: B
Interest: Abu GH¢2,000, Ojo GH¢1,000. Remaining profit GH¢51,000. Abu's share (3/5) = GH¢30,600.
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Q31. Use the following information to answer this question. Capital: Abu GH¢40,000, Ojo GH¢20,000; Drawings: Abu GH¢18,000, Ojo GH¢12,000. Profit for the year GH¢54,000 with 5% interest on capital and profit sharing ratio 3:2. Ojo's share of profit is
AGH¢32,400
BGH¢30,600
CGH¢21,600
DGH¢20,400
Correct Answer: D
Ojo's share (2/5 of GH¢51,000) = GH¢20,400.
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Q32. Use the following information to answer this question. Capital: Abu GH¢40,000, Ojo GH¢20,000; Drawings: Abu GH¢18,000, Ojo GH¢12,000. Profit for the year GH¢54,000 with 5% interest on capital and profit sharing ratio 3:2. The balance on Abu's current account is
Q33. Use the following information to answer this question. Sales for the year 2021: Credit Le70,000; Cash Le30,000. The accounting concept underlying the recording of Le100,000 in the sales account is
Agoing concern concept
Brealization concept
Cmateriality concept
Dconsistency concept
Correct Answer: B
The realization concept records sales when earned, regardless of cash or credit.
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Q34. Sales journal is used for recording
Acash sales
Bsales returns
Ccredit sales
Dsales allowances
Correct Answer: C
The sales journal records all credit sales transactions.
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Q35. Which of the following circumstances will not lead to dissolution of a partnership? When a partner
Ais bankrupt
Bretires
Cdies
Dis insane
Correct Answer: B
A partner's retirement does not necessarily dissolve the partnership if the agreement allows continuation with remaining partners.
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Q36. When "C" is written in front of an entry in the folio column of a cash book, it shows a
Adouble entry
Bcash entry
Ccontra entry
Dsingle entry
Correct Answer: C
"C" indicates a contra entry between cash and bank columns in the cash book.
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Q37. A user of accounting information who would be more interested in the liquidity of the firm is the
Acustomer
Bsupplier
Ctax authority
Dpotential investor
Correct Answer: B
Suppliers (trade creditors) are interested in liquidity to ensure timely payment of debts.
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Q38. An item that cannot be classified as an expense is
Acommission received
Blaptop purchased
Craw materials bought
Dcreditor balance
Correct Answer: B
Laptop purchased is a capital expenditure (asset), not an expense.
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Q39. An item recorded on the credit side of trading, profit and loss account is
Arent and rates
Bdiscount received
Csalaries paid
Dcarriage outwards
Correct Answer: B
Discount received is an income item credited to the profit and loss account.
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Q40. An item that would be apportioned in proportion to purchases of each department is
Adiscount received
Bbad debts
Ccarriage outwards
Ddiscount allowed
Correct Answer: A
Discount received is apportioned based on purchases as it relates to buying activities.