POST UTME ACHIEVERS UNIVERSITY 2020 Accounting | Objective

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Question 1
A company uses the perpetual inventory system. On January 1, 2020, it had 500 units of a product in stock, costing ₦120 each. During the year, 300 units were sold, and 200 units were purchased at ₦150 each. Calculate the cost of goods sold for the year.
A. ₦36,000
Correct B. ₦42,000
C. ₦48,000
D. ₦54,000

Correct Answer: B

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Question 2
A company's trial balance as of December 31, 2020, is as follows: Debit ₦ 1,500,000 Cash ₦ 2,000,000 Accounts Receivable ₦ 3,000,000 Inventory ₦ 4,000,000 Prepaid Rent ₦ 5,000,000 Credit ₦ 1,000,000 Accounts Payable ₦ 2,000,000 Salaries Payable ₦ 3,000,000 Unearned Revenue ₦ 4,000,000 Common Stock ₦ 5,000,000 What is the correct order of the accounts in the general ledger?
A. Cash, Accounts Receivable, Inventory, Prepaid Rent, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock
B. Cash, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock, Accounts Receivable, Inventory, Prepaid Rent
Correct C. Cash, Accounts Receivable, Inventory, Prepaid Rent, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock
D. Cash, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock, Accounts Receivable, Inventory, Prepaid Rent

Correct Answer: C

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Question 3
A company uses the straight-line method of depreciation. The cost of a machine is ₦120,000, and its useful life is 5 years. Calculate the annual depreciation expense.
Correct A. ₦24,000
B. ₦30,000
C. ₦36,000
D. ₦42,000

Correct Answer: A

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Question 4
A company's bank statement as of December 31, 2020, shows a balance of ₦50,000. However, the company's cash book shows a balance of ₦60,000. What is the reason for the discrepancy?
A. The bank has charged a service fee.
B. The company has deposited a check that has not yet cleared.
Correct C. The company has written a check that has not yet cleared.
D. The bank has credited an interest on the company's account.

Correct Answer: C

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Question 5
A company's trial balance as of December 31, 2020, is as follows: Debit ₦ 1,500,000 Cash ₦ 2,000,000 Accounts Receivable ₦ 3,000,000 Inventory ₦ 4,000,000 Prepaid Rent ₦ 5,000,000 Credit ₦ 1,000,000 Accounts Payable ₦ 2,000,000 Salaries Payable ₦ 3,000,000 Unearned Revenue ₦ 4,000,000 Common Stock ₦ 5,000,000 What is the correct order of the accounts in the general ledger?
A. Cash, Accounts Receivable, Inventory, Prepaid Rent, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock
B. Cash, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock, Accounts Receivable, Inventory, Prepaid Rent
Correct C. Cash, Accounts Receivable, Inventory, Prepaid Rent, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock
D. Cash, Accounts Payable, Salaries Payable, Unearned Revenue, Common Stock, Accounts Receivable, Inventory, Prepaid Rent

Correct Answer: C

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Question 6
A partnership is formed by three individuals, A, B, and C, with capital contributions of ₦150,000, ₦200,000, and ₦250,000 respectively. The profit-sharing ratio is 3:5:7. Calculate the total profit for the year, given that the total profit is ₦750,000.
A. ₦450,000
B. ₦525,000
Correct C. ₦600,000
D. ₦675,000

Correct Answer: C

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Question 7
A company issues 10,000 shares of ₦10 each at a premium of ₦5 per share. Calculate the total amount received from the issue of shares.
A. ₦500,000
B. ₦550,000
Correct C. ₦600,000
D. ₦650,000

Correct Answer: C

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Question 8
A company purchases a machine for ₦500,000 and depreciates it by 10% per annum. Calculate the book value of the machine after 3 years.
A. ₦350,000
B. ₦375,000
Correct C. ₦400,000
D. ₦425,000

Correct Answer: C

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Question 9
A company issues 5,000 debentures of ₦100 each at a premium of ₦10 per debenture. Calculate the total amount received from the issue of debentures.
A. ₦500,000
B. ₦550,000
Correct C. ₦600,000
D. ₦650,000

Correct Answer: C

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Question 10
A company purchases a building for ₦1,000,000 and depreciates it by 5% per annum. Calculate the book value of the building after 2 years.
A. ₦950,000
B. ₦975,000
Correct C. ₦1,000,000
D. ₦1,025,000

Correct Answer: C

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Question 11
A company's cash book shows a balance of ₦120,000. However, the bank statement shows a balance of ₦150,000. The difference of ₦30,000 is due to a dishonored cheque of ₦20,000 and an NSF cheque of ₦10,000. What is the correct journal entry to record the NSF cheque?
A. Debit NSF Cheque ₹10,000, Credit Cash ₹10,000
B. Debit NSF Cheque ₹10,000, Debit Dishonoured Cheque ₹20,000
Correct C. Credit NSF Cheque ₹10,000, Debit Cash ₹10,000
D. Debit NSF Cheque ₹10,000, Credit Dishonoured Cheque ₹20,000

Correct Answer: C

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Question 12
A government agency has the following transactions: Purchase of office equipment for ₦50,000, Salaries paid to employees for ₦200,000, Rent paid for ₦30,000. What is the correct accounting equation for the above transactions?
Correct A. Assets = Liabilities + Equity
B. Liabilities = Assets + Equity
C. Equity = Assets - Liabilities
D. Assets = Equity - Liabilities

Correct Answer: A

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Question 13
A company has the following transactions: Purchase of goods for ₦100,000, Sale of goods for ₦150,000, Purchase of office equipment for ₦20,000. What is the correct journal entry for the purchase of office equipment?
Correct A. Debit Office Equipment ₹20,000, Credit Cash ₹20,000
B. Debit Office Equipment ₹20,000, Credit Bank ₹20,000
C. Debit Office Equipment ₹20,000, Debit Cash ₹20,000
D. Debit Office Equipment ₹20,000, Credit Bank ₹20,000

Correct Answer: A

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Question 14
A company has the following transactions: Purchase of goods for ₦100,000, Sale of goods for ₦150,000, Purchase of office equipment for ₦20,000. What is the correct accounting equation for the above transactions?
Correct A. Assets = Liabilities + Equity
B. Liabilities = Assets + Equity
C. Equity = Assets - Liabilities
D. Assets = Equity - Liabilities

Correct Answer: A

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Question 15
A company has the following transactions: Purchase of goods for ₦100,000, Sale of goods for ₦150,000, Purchase of office equipment for ₦20,000. What is the correct journal entry for the purchase of goods?
Correct A. Debit Goods ₹100,000, Credit Cash ₹100,000
B. Debit Goods ₹100,000, Credit Bank ₹100,000
C. Debit Goods ₹100,000, Debit Cash ₹100,000
D. Debit Goods ₹100,000, Credit Bank ₹100,000

Correct Answer: A

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Question 16
In a public sector accounting system, what is the primary purpose of the 'Statement of Changes in Net Assets'?
Correct A. To report the increase or decrease in assets, liabilities, and equity
B. To present the financial position of the entity at the end of the period
C. To disclose the accounting policies used in preparing the financial statements
D. To provide a summary of the entity's financial performance

Correct Answer: A

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Question 17
A company has two departments: Manufacturing and Sales. The Manufacturing department has a direct labor cost of ₦1,500,000 and a direct material cost of ₦2,000,000. If the company uses the absorption costing method, what is the total cost of the Manufacturing department?
A. ₦3,500,000
B. ₦3,500,500
Correct C. ₦3,500,000
D. ₦3,500,500

Correct Answer: C

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Question 18
A partnership has two partners: John and Jane. John has a 60% interest in the partnership and Jane has a 40% interest. If the partnership has a net income of ₦500,000, what is John's share of the net income?
Correct A. ₦300,000
B. ₦400,000
C. ₦300,000
D. ₦400,000

Correct Answer: A

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Question 19
A company uses the double-entry system of accounting. If the company has a debit balance of ₦100,000 in the 'Accounts Payable' account and a credit balance of ₦200,000 in the 'Accounts Receivable' account, what is the net effect on the company's assets?
A. Increase in assets by ₦100,000
Correct B. Decrease in assets by ₦100,000
C. Increase in assets by ₦100,000
D. Decrease in assets by ₦100,000

Correct Answer: B

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Question 20
A company has a manufacturing department that produces a product at a cost of ₦500 per unit. If the company sells the product at a price of ₦750 per unit, what is the gross profit per unit?
Correct A. ₦250
B. ₦250
C. ₦250
D. ₦250

Correct Answer: A

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Question 21
A company issued 10,000 shares of ₦ 1 each at a premium of ₦ 2 per share. The issue expenses were ₦ 50,000. Prepare the journal entry for the issue of shares.
A. Debit Share Capital ₦ 120,000, Credit Cash ₦ 100,000, Credit Issue Expenses ₦ 20,000
B. Debit Share Capital ₦ 100,000, Credit Cash ₦ 120,000, Credit Issue Expenses ₦ 20,000
Correct C. Debit Share Capital ₦ 120,000, Credit Cash ₦ 100,000, Credit Issue Expenses ₦ 50,000
D. Debit Share Capital ₦ 100,000, Credit Cash ₦ 120,000, Credit Issue Expenses ₦ 50,000

Correct Answer: C

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Question 22
A company purchased a machine for ₦ 50,000. The machine is expected to have a useful life of 5 years and a residual value of ₦ 5,000. Calculate the annual depreciation using the straight-line method.
Correct A. ₦ 9,500
B. ₦ 10,000
C. ₦ 9,000
D. ₦ 8,000

Correct Answer: A

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Question 23
A company's trial balance showed the following balances: Accounts Payable ₦ 50,000, Accounts Receivable ₦ 30,000, Sales Revenue ₦ 200,000, Cost of Goods Sold ₦ 150,000. Prepare the company's income statement.
Correct A. Sales Revenue ₦ 200,000, Cost of Goods Sold ₦ 150,000, Gross Profit ₦ 50,000, Operating Expenses ₦ 20,000, Net Income ₦ 30,000
B. Sales Revenue ₦ 200,000, Cost of Goods Sold ₦ 150,000, Gross Profit ₦ 50,000, Operating Expenses ₦ 30,000, Net Income ₦ 20,000
C. Sales Revenue ₦ 200,000, Cost of Goods Sold ₦ 150,000, Gross Profit ₦ 50,000, Operating Expenses ₦ 20,000, Net Income ₦ 30,000
D. Sales Revenue ₦ 200,000, Cost of Goods Sold ₦ 150,000, Gross Profit ₦ 50,000, Operating Expenses ₦ 30,000, Net Income ₦ 20,000

Correct Answer: A

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Question 24
A company's balance sheet showed the following balances: Cash ₦ 100,000, Accounts Payable ₦ 50,000, Common Stock ₦ 200,000, Retained Earnings ₦ 50,000. Prepare the company's statement of stockholders' equity.
Correct A. Common Stock ₦ 200,000, Retained Earnings ₦ 50,000, Total Stockholders' Equity ₦ 250,000
B. Common Stock ₦ 200,000, Retained Earnings ₦ 50,000, Total Stockholders' Equity ₦ 250,000
C. Common Stock ₦ 200,000, Retained Earnings ₦ 50,000, Total Stockholders' Equity ₦ 250,000
D. Common Stock ₦ 200,000, Retained Earnings ₦ 50,000, Total Stockholders' Equity ₦ 250,000

Correct Answer: A

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Question 25
A company's trial balance showed the following balances: Accounts Payable ₦ 50,000, Accounts Receivable ₦ 30,000, Sales Revenue ₦ 200,000, Cost of Goods Sold ₦ 150,000. Prepare the company's balance sheet.
Correct A. Cash ₦ 100,000, Accounts Payable ₦ 50,000, Common Stock ₦ 200,000, Retained Earnings ₦ 50,000
B. Cash ₦ 100,000, Accounts Payable ₦ 50,000, Common Stock ₦ 200,000, Retained Earnings ₦ 50,000
C. Cash ₦ 100,000, Accounts Payable ₦ 50,000, Common Stock ₦ 200,000, Retained Earnings ₦ 50,000
D. Cash ₦ 100,000, Accounts Payable ₦ 50,000, Common Stock ₦ 200,000, Retained Earnings ₦ 50,000

Correct Answer: A

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