POST UTME MADONNA UNIVERSITY 2021 Accounting | Objective

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Question 1
In a partnership account, the capital of a partner who withdraws cash from the business is reduced by the amount withdrawn. However, if the partner's capital is reduced below the minimum capital required by the partnership agreement, the deficiency must be made up by the partner. Which of the following is the correct treatment of the deficiency?
A. The deficiency is treated as a loan from the partner to the partnership.
B. The deficiency is treated as a capital contribution from the partner to the partnership.
Correct C. The deficiency is treated as a loss to the partner and is deducted from the partner's capital.
D. The deficiency is treated as a loan from the partnership to the partner.

Correct Answer: C

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Question 2
A company issues 1,000, 10% debentures of ₦100 each at a discount of 5%. The debentures are redeemable after 5 years. Calculate the amount of discount on the debentures.
Correct A. ₦50,000
B. ₦50,000
C. ₦50,000
D. ₦50,000

Correct Answer: A

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Question 3
A company's trading account for the year ended 31st December 2020 shows a profit of ₦500,000. The company's profit and loss account for the year ended 31st December 2020 shows a net profit of ₦750,000. The company's balance sheet as at 31st December 2020 shows total assets of ₦2,500,000 and total liabilities of ₦1,500,000. Calculate the company's retained earnings as at 31st December 2020.
Correct A. ₦250,000
B. ₦250,000
C. ₦250,000
D. ₦250,000

Correct Answer: A

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Question 4
A company's balance sheet as at 31st December 2020 shows total assets of ₦2,500,000 and total liabilities of ₦1,500,000. The company's profit and loss account for the year ended 31st December 2020 shows a net profit of ₦750,000. Calculate the company's equity as at 31st December 2020.
Correct A. ₦1,250,000
B. ₦1,250,000
C. ₦1,250,000
D. ₦1,250,000

Correct Answer: A

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Question 5
A company's balance sheet as at 31st December 2020 shows total assets of ₦2,500,000 and total liabilities of ₦1,500,000. The company's profit and loss account for the year ended 31st December 2020 shows a net loss of ₦500,000. Calculate the company's equity as at 31st December 2020.
Correct A. ₦1,000,000
B. ₦1,000,000
C. ₦1,000,000
D. ₦1,000,000

Correct Answer: A

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Question 6
A company's trial balance shows an error of £ 1,500 due to an incorrect posting of a £ 3,000 debit to the office supplies account. The correct entry should have been a £ 2,500 debit. What is the correct journal entry to rectify this error?
A. Office Supplies £ 1,500, Capital £ 1,500
Correct B. Office Supplies £ 2,500, Capital £ 1,500
C. Office Supplies £ 1,500, Capital £ 2,500
D. Office Supplies £ 2,500, Capital £ 2,500

Correct Answer: B

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Question 7
A company's balance sheet shows an asset of £ 10,000 with a carrying value of £ 8,000. The asset is expected to be sold for £ 12,000. What is the accounting treatment for this asset?
A. The asset is written down to £ 8,000
B. The asset is written up to £ 12,000
Correct C. The asset is sold for £ 12,000 and the profit is recognized
D. The asset is written off as a loss

Correct Answer: C

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Question 8
A company's profit and loss account shows a profit of £ 20,000. The company's balance sheet shows a retained profit of £ 15,000. What is the accounting treatment for the remaining profit?
A. The remaining profit is distributed as dividends
Correct B. The remaining profit is retained in the company
C. The remaining profit is transferred to the general reserve
D. The remaining profit is transferred to the revaluation reserve

Correct Answer: B

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Question 9
A company's trial balance shows an error of £ 2,000 due to an incorrect posting of a £ 4,000 credit to the accounts payable account. The correct entry should have been a £ 2,000 credit. What is the correct journal entry to rectify this error?
Correct A. Accounts Payable £ 2,000, Capital £ 2,000
B. Accounts Payable £ 4,000, Capital £ 2,000
C. Accounts Payable £ 2,000, Capital £ 4,000
D. Accounts Payable £ 4,000, Capital £ 4,000

Correct Answer: A

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Question 10
A company's balance sheet shows an asset of £ 15,000 with a carrying value of £ 12,000. The asset is expected to be sold for £ 18,000. What is the accounting treatment for this asset?
A. The asset is written down to £ 12,000
B. The asset is written up to £ 18,000
Correct C. The asset is sold for £ 18,000 and the profit is recognized
D. The asset is written off as a loss

Correct Answer: C

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Question 11
A company issued 5,000 9% debentures of ₦100 each at a discount of 5%. Calculate the amount received from debenture holders.
A. ₦450,000
Correct B. ₦475,000
C. ₦500,000
D. ₦525,000

Correct Answer: B

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Question 12
A company's trading account for the year ended 31st December 2021 showed a profit of ₦1,500,000. The company's profit and loss account for the year ended 31st December 2021 showed a net profit of ₦2,500,000. Calculate the company's net profit for the year ended 31st December 2021.
A. ₦1,500,000
B. ₦2,000,000
Correct C. ₦2,500,000
D. ₦3,000,000

Correct Answer: C

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Question 13
A company's balance sheet as at 31st December 2021 showed a total of ₦10,000,000 in assets and a total of ₦5,000,000 in liabilities. Calculate the company's equity as at 31st December 2021.
A. ₦5,000,000
Correct B. ₦7,500,000
C. ₦10,000,000
D. ₦12,500,000

Correct Answer: B

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Question 14
A company's single entry system showed a total of ₦15,000,000 in assets and a total of ₦8,000,000 in liabilities. Calculate the company's equity as at 31st December 2021.
A. ₦7,000,000
Correct B. ₦10,000,000
C. ₦12,000,000
D. ₦15,000,000

Correct Answer: B

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Question 15
A company's departmental accounts for the year ended 31st December 2021 showed a total of ₦20,000,000 in sales and a total of ₦15,000,000 in expenses. Calculate the company's net profit for the year ended 31st December 2021.
A. ₦5,000,000
B. ₦10,000,000
Correct C. ₦15,000,000
D. ₦20,000,000

Correct Answer: C

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Question 16
A company issued 10,000 shares of £ 1 each at a premium of £ 0.50 per share. Calculate the total amount received from the issue of shares.
A. ₦12,500
Correct B. ₦15,000
C. ₦20,000
D. ₦25,000

Correct Answer: B

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Question 17
A company's cash book shows the following transactions: | Date | Particulars | Debit | Credit | | --- | --- | --- | --- | | 1st Jan | Cash | 1,000 | | | 2nd Jan | Bank | | 500 | | 3rd Jan | Cash | | 200 | | 4th Jan | Bank | | 300 | What is the balance of the cash account?
Correct A. ₦1,800
B. ₦2,000
C. ₦2,200
D. ₦2,300

Correct Answer: A

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Question 18
A company's balance sheet as at 31st December 2020 is as follows: | Assets | | Liabilities | | Equity | | --- | --- | --- | --- | --- | | | ₦ 100,000 | | ₦ 50,000 | | ₦ 20,000 | | | ₦ 150,000 | | ₦ 70,000 | | ₦ 30,000 | What is the total amount of equity?
A. ₦50,000
B. ₦60,000
C. ₦70,000
Correct D. ₦80,000

Correct Answer: D

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Question 19
A company's cash book shows the following transactions: | Date | Particulars | Debit | Credit | | --- | --- | --- | --- | | 1st Jan | Cash | 1,000 | | | 2nd Jan | Bank | | 500 | | 3rd Jan | Cash | | 200 | | 4th Jan | Bank | | 300 | What is the balance of the bank account?
A. ₦1,800
B. ₦2,000
C. ₦2,200
Correct D. ₦2,300

Correct Answer: D

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Question 20
A company's balance sheet as at 31st December 2020 is as follows: | Assets | | Liabilities | | Equity | | --- | --- | --- | --- | --- | | | ₦ 100,000 | | ₦ 50,000 | | ₦ 20,000 | | | ₦ 150,000 | | ₦ 70,000 | | ₦ 30,000 | What is the total amount of liabilities?
A. ₦120,000
B. ₦130,000
C. ₦140,000
Correct D. ₦150,000

Correct Answer: D

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Question 21
A company's cash book shows the following transactions: | Date | Particulars | Debit | Credit | | --- | --- | --- | --- | | 1st Jan | Cash | 1,000 | | | 2nd Jan | Bank | | 500 | | 3rd Jan | Cash | | 200 | | 4th Jan | Bank | | 300 | What is the total amount of cash transactions?
A. ₦1,200
B. ₦1,400
C. ₦1,600
Correct D. ₦1,800

Correct Answer: D

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Question 22
A company's balance sheet as at 31st December 2020 is as follows: | Assets | | Liabilities | | Equity | | --- | --- | --- | --- | --- | | | ₦ 100,000 | | ₦ 50,000 | | ₦ 20,000 | | | ₦ 150,000 | | ₦ 70,000 | | ₦ 30,000 | What is the total amount of assets?
A. ₦250,000
B. ₦260,000
C. ₦270,000
Correct D. ₦280,000

Correct Answer: D

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Question 23
A partnership was formed on January 1, 2020, with an initial capital of ₦500,000. The partners' capital contributions were as follows: A ₦200,000, B ₦150,000, and C ₦150,000. The partnership's profit for the year ended December 31, 2020, was ₦250,000. The profit was divided in the ratio 2:3:5. Calculate the amount of profit that each partner should receive.
A. ₦50,000
Correct B. ₦75,000
C. ₦125,000
D. ₦200,000

Correct Answer: B

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Question 24
A company uses the straight-line method of depreciation. The cost of a machine is ₦500,000, and its residual value is ₦50,000. The machine is expected to be used for 5 years. Calculate the annual depreciation charge.
A. ₦80,000
B. ₦90,000
Correct C. ₦100,000
D. ₦110,000

Correct Answer: C

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Question 25
A company's trial balance as at December 31, 2020, is as follows: Debit ------------------- Cash: ₦100,000 Accounts Payable: ₦50,000 Sales Revenue: ₦200,000 ------------------- Credit ------------------- Accounts Receivable: ₦150,000 Cost of Goods Sold: ₦100,000 ------------------- Identify the error in the trial balance.
Correct A. Sales Revenue is debited
B. Accounts Payable is credited
C. Cost of Goods Sold is credited
D. Accounts Receivable is debited

Correct Answer: A

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