Financial planning encompasses setting goals, managing resources, and mitigating risks for financial stability.
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Q4. What is the annual depreciation for an asset worth N80,000 with a useful life of 4 years using the straight-line method?
AN15,000
BN20,000
CN25,000
DN30,000
Correct Answer: B
Annual depreciation = N80,000 / 4 = N20,000.
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Q5. In public sector accounting, what is the statement of assets and liabilities also known as?
AIncome and expenditure account
BBalance sheet
CCash flow statement
DAppropriation account
Correct Answer: B
The statement of assets and liabilities is equivalent to a balance sheet, showing the government’s financial position.
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Q6. What is the surplus for a club with subscriptions of N20,000 and expenses of N15,000 for the year?
AN3,000
BN5,000
CN10,000
DN15,000
Correct Answer: B
Surplus = N20,000 - N15,000 = N5,000.
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Q7. How is a bad debt of N5,000 recorded in the journal?
ADebit bad debts, credit cash
BDebit bad debts, credit debtors
CDebit debtors, credit bad debts
DDebit cash, credit bad debts
Correct Answer: B
Bad debts are an expense (debit bad debts) and reduce debtors (credit debtors).
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Q8. What is the return on capital employed (ROCE) for a company with a net profit of N40,000 and capital employed of N200,000?
A15%
B20%
C25%
D30%
Correct Answer: B
ROCE = (N40,000 / N200,000) × 100 = 20%.
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Q9. What is the total factory overhead cost if a manufacturing firm incurs factory rent of N5,000, factory electricity of N3,000, and machinery depreciation of N2,000?
Q10. What is the initial accounting cost of a machine with a gross invoice price of N15,000, sales tax of N500, purchase discount taken of N300, freight of N250, assembly of N450, installation of N200, and insurance of N150?
AN16,250
BN16,150
CN16,050
DN15,950
Correct Answer: C
Initial cost = N15,000 + N500 - N300 + N250 + N450 + N200 = N16,050. Insurance is not capitalized.
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Q11. What is the importance of accounting ethics?
ATo promote transparency and accountability
BTo ensure integrity and professionalism
CTo maintain public trust
DAll of the above
Correct Answer: D
Accounting ethics ensures transparency, integrity, and public trust in financial reporting.
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Q12. What is the cost of finished goods transferred if a business has opening work-in-progress of N6,000, closing work-in-progress of N4,000, and cost of production before work-in-progress of N30,000?
Q19. What is the effect on the suspense account if a trial balance shows a difference of N3,000 on the credit side, and it’s found that a sale of N3,000 was omitted?
ADebit N3,000
BCredit N3,000
CNo effect
DClear the suspense account
Correct Answer: D
Recording the omitted sale (debit debtors, credit sales) clears the N3,000 credit in the suspense account.
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Q20. What is the closing balance of the purchases ledger control account with an opening balance of N12,000, credit purchases of N20,000, discounts received of N2,000, and payments to creditors of N15,000?
The income statement shows financial performance, unlike accounting records like trial balance or journals.
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Q23. What is the market value of goods produced by a manufacturing firm if the goods are valued at N10,000 in the market?
AN8,000
BN9,000
CN10,000
DN11,000
Correct Answer: C
Market value is N10,000 as stated, with no adjustments required.
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Q24. What is the loss distribution for two partners, A and B, sharing profits and losses in the ratio 2:3, with A receiving a salary of N2,000 before profit sharing, if a net loss of N5,000 occurs?
AA: N1,400, B: N2,100
BA: N600, B: N900
CA: N2,000, B: N3,000
DA: N1,000, B: N1,500
Correct Answer: B
Loss after salary = N5,000 + N2,000 = N7,000. A’s share = 2/5 × N7,000 = N2,800; B’s = 3/5 × N7,000 = N4,200. A’s net loss = N2,800 - N2,000 = N600; B’s = N900.
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Q25. What is the opening balance of the accumulated fund account if a club’s balance sheet shows an accumulated fund of N8,000?
AN6,000
BN8,000
CN10,000
DN12,000
Correct Answer: B
The accumulated fund in the balance sheet is the opening balance, N8,000.
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Q26. What is the additional provision required if debtors are N40,000, the current provision for bad debts is N1,200, and the provision is increased to 4% of debtors?
AN400
BN800
CN1,200
DN1,600
Correct Answer: A
New provision = 4% of N40,000 = N1,600. Additional provision = N1,600 - N1,200 = N400.
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Q27. What happens to a business when a machine is lost due to theft?
AAn increase in assets and liabilities
BA decrease in assets and capital
CAn increase in capital and liabilities
DA decrease in liabilities and assets
Correct Answer: B
Theft reduces assets (machine) and capital (via loss or direct adjustment).
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Q28. What is the value of closing stock using the FIFO method if a business purchases 200 units at N40 each and later 300 units at N50 each, and 400 units are sold?
AN5,000
BN6,000
CN7,000
DN8,000
Correct Answer: A
FIFO: Sell 200 units at N40, 200 at N50. Closing stock = 100 units at N50 = N5,000.
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Q29. How is a note of N5,000 collected by a bank, not yet recorded in the company’s books, treated in the bank reconciliation?
AA deduction from the bank statement balance
BAn addition to the cash book balance
CA deduction from the cash book balance
DAn addition to the bank statement balance
Correct Answer: B
The note increases the cash book balance, as it’s collected but unrecorded.
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Q30. What is B’s share of the profit if partners A and B share profits equally after A receives a salary of N4,000, and the total profit is N14,000?
Q31. What is A’s interest for the year in a partnership where A’s capital is N100,000 and interest on capital is 5% per annum?
AN4,000
BN5,000
CN6,000
DN7,000
Correct Answer: B
Interest = N100,000 × 5% = N5,000.
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Q32. What is the adjusted bank statement balance if a cash book shows a balance of N15,000, but the bank statement shows N13,500 due to unpresented cheques of N1,500?
AN12,000
BN13,500
CN15,000
DN16,500
Correct Answer: B
The bank statement balance (N13,500) is correct; unpresented cheques affect the cash book.
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Q33. What is the debtors turnover ratio for a business with credit sales of N180,000, opening debtors of N20,000, and closing debtors of N30,000?
Half is expense (N6,000), half is prepayment (N6,000). Debit both, credit cash N12,000.
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Q35. What is depreciation classified as?
AA decrease in asset value
BAn increase in asset value
CA non-cash expense
DA type of revenue
Correct Answer: C
Depreciation is a non-cash expense allocating asset cost over its useful life.
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Q36. What is an income and expenditure account a summary of?
AAll income and expenditure during a period
BRevenue income and expenditure during a period
CReceipts and payments during a period
DTrading income during a period
Correct Answer: B
It summarizes revenue income and expenditure, excluding capital items.
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Q37. According to Garner vs. Murray, how is the deficiency in a partner’s capital account handled if the partner is insolvent during partnership dissolution?
ABorne by all the partners
BBorne by the insolvent partner
CWritten off
DBorne by the solvent partners
Correct Answer: D
Garner vs. Murray states solvent partners bear the insolvent partner’s deficiency.
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Q38. How much will a shareholder with 500 shares receive if a company declares a 10% dividend on 1,000,000 ordinary shares with a nominal value of N1 each?
AN50
BN100
CN500
DN1,000
Correct Answer: A
Dividend per share = 10% of N1 = N0.10. Total = 500 × N0.10 = N50.
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Q39. How is a trial balance difference of N4,000 recorded in a suspense account corrected if a sale of N4,000 was omitted?
ADebit suspense, credit sales
BDebit sales, credit suspense
CDebit cash, credit suspense
DDebit suspense, credit cash
Correct Answer: A
Correct entry: debit suspense, credit sales to clear the difference.
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Q40. What distinguishes a non-profit-making organization from a profit-making one?
ADoes not earn income
BIs not run by partners
CDoes not make a profit
DIs committed to social services
Correct Answer: D
Non-profits focus on social services, not profit generation.