30 ACCOUNT QUESTIONS AND ANSWERS

1. Accrual concept stipulates that
   A. revenue should be recognized when it is earned
   B. cost should be recognized when the expenditure is paid
   C. revenue should be recognized only when the cash is paid
   D. costs should be recognized when they are incurred.
2. The basic role of accounting is to
   A. detest fraud B. attest to financial statement
   C. Measure performance D. protect shareholders
3. The need for changes in accounting theory in Nigeria was influenced by the
   A. dynamics of commercialization and privatization policies
   B. growth in size of business units
   C. introduction of the structural adjustment programme
   D. inconvertibility of the nation’s currency
4. A bookkeeping error occurs when there is
   A. a deliberate manipulation of records
   B. unintentional correct posting in the ledger
   C. intentional failure to record transactions completely
   D. incorrect records and oversights that are not intended.
5. When a proprietor withdraws cash from the business for private uses, he
   A. debits cash account and credits drawings account
   B. credits cash account and debit cash account
   C. credits cash account and debits drawings account.
   D. credits cash account and debits drawings account
6. A basic unifying concept in accounting implies that A. where creditors’ account is zero, the assets equal to the owners’ equity B. there should be balance in creditors’ account in order to ensure total assets. C. revenues should be supported by investors and owners’ capital D. total assets can be less than liabilities and equity.
7. A source document for sales day book is. A. a requisition form. B. an invoice C. a custom advice D. a credit advice.
8. In a cash book, the opening balance was N 7600 closing balance N9200 and the total cash received during the period was N18000. What was the amount of cash paid out during period? A. N8900 B. 9800 C. 1460 D. 16400
9. If the total discount allowed in a cash book was N230 and the total discount was N255, which of the following is true concerning the two discounts? A. They must be balanced the cash book and the difference taken to the debtors ledger. B. They must be balanced in the cash book and the difference taken to the trial balance. C. They should not be balanced in the cash be before being taken to the trial balance. D. They should not appear in the trial balance as they will already either received or paid out.
10. Which of the following bank reconciliation items should not be added or subtracted from the bank statement balance to determine the adjusted cash balance? A. Outstanding cheques B. Bank service charges C. Deposits in the mail not yet received by the bank. D. Bank error, charging a company for another company’s cheque.
11. The fixed amount of money given to a petty cashier at the beginning of a period is called? A. Imprest B. Petty cash C. Float D. Cash advance
12. A provision for bad debt account had N20000 and the vehicle is to be depreciated at 5%.
    Using the reducing balance method of depreciation, what would be the value of the assets after 3 years. A. N19,000.00 B. N18,050.50 C. N17,147.50 D. N16, 290.13
    Use the information below to answer question 13 and 14.
    N
    Capiatl: opening balance 307,000
    closing balance 342,000
    Net profit for the period 121,600
    Opening stock 98,800
    Purchases 706,000
    Carriage inwards 17,500
    Cost of goods sold 740,000
    Total selling, general and
    admin. Expenses 526,000
    Discount received 9,650
13. What is the closing stock for the period? A. N 69,300 B. N 81,300 C. N 81,600 D. N 106,400
14. Calculate the gross profit for the period. A. N 535,650 B. N628,300 C. N637,950D. N 647,600
15. Chibuike bought 36 notebooks at N10 each from John and was given a trade discount of 5%. In addition, he was offered 1% cash discount which he took advantage of. How much did Chibuike pay? A. N338.58 B. N342.00 C. N345.42 D. N360.00
16. When the factory cost of production has been ascertained, manufactured goods are transferred to trading account by A. debiting manufacturing account and crediting trading account. B. crediting sales account and debiting trading account. C. debiting sales account and crediting trading account. D. crediting manufacturing account and debiting trading account.
17. Lawal and Co makes blocks and sells to builders. In computing prime cost, which of the following costs would be considered appropriate? A. Cement, sand and carriage outwards B. Water, carriage inwards and cements C. Sales boys’ wages, cement and sand D. Carriage outwards, carriage inwards and cements
18. Manufacturing costs can be classified based on A. timing of charges, degree of averaging and size of capital B. degree of averaging, ease of traceability and timing of charges C. degree of averaging, size of floor space occupied and cost accounts D. number of employees, timing of charges and management style.
19. The difference between the factory cost of production and the prime cost of production is A. direct materials B. direct labour C. selling expenses D. overhead
20. The fundamental accounting equation is represented as A. Assets – liabilities = capital B. Assets + capital = liabilities C. Assets = capital – liabilities D. Assets = liabilities – capital
21. A credit entry represent all these except A. A decrease in the value of asset B. An item of expenditure or expenses C. An increase in the value of assets D. An item of income or gain
22. All these are subsidiary books of account except A. sales journal B. petty cash voucher C. purchases journal D. Returns inwards daybook
23. The purpose of preparing trading account is to ascertain A. Avenge stock B. Gross profit or loss C. cost of goods sold D. Net profit or loss
24. When bank charges are discovered in a bank statement, adjustment is effected in the A. Bank, loan account B. cash book C. Bank reconciliation statement D. suspense account
25. Examples of real accounts are all these except A. Machinery account B. furniture & fittings accounts C. Land & building accounts D. Discount allowed accounts
26. All these are reasons for disagreement between the cash book and bank statement except A. Errors by the bank B. Direct debit C. standing orders D. compensating errors
27. All these are items of current assets except A. stock B. Debtors C. Expenses accruals D. Expenses prepayment
28. All these are errors that do not affect the agreement of the trial balance except A. Error of principle B. Error of omission C. Error of one sided omission D. Error of Commission
29. A receipt overcast of #150 will have what effect A. credit entry in the adjusted cash book B. Debit entry in the adjusted cash book C. No effect D. Added with other items to balance as per cash book
30. A document issued by limited liability company inviting the public to subscribe to its share is known as __ A. prospectus B. Article of Association C. Memorandum of Association D. certification of incorporation

ANSWERS

1. A

2. B

3. B

4. B

5. C

6. A

7. B

8. D

9. D

10. C

11. C

12. N/A

13. B

14. C

15. A

16. D

17. C

18 . B

19. C

20. D

21. B

22. B

23. B

24. B

25. D

26. D

27. D

28. C

29. A

30. A

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