POST UTME WELLSPRING UNIVERSITY 2023 Accounting | Objective

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Question 1
A company's cash book shows a balance of ₦120,000. The bank statement shows a balance of ₦130,000. The difference is due to a bank overdraft of ₦10,000. What is the correct journal entry to record the bank overdraft?
Correct A. Debit Cash ₦10,000, Credit Bank Overdraft ₦10,000
B. Debit Bank Overdraft ₦10,000, Credit Cash ₦10,000
C. Debit Cash ₦10,000, Credit Bank ₦10,000
D. Debit Bank ₦10,000, Credit Cash ₦10,000

Correct Answer: A

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Question 2
A manufacturing company produces two products, A and B. Product A requires 2 hours of direct labor and 3 hours of indirect labor, while Product B requires 3 hours of direct labor and 2 hours of indirect labor. If the company works 40 hours of direct labor and 60 hours of indirect labor in a week, how many units of Product A and Product B should be produced?
Correct A. 10 units of Product A and 15 units of Product B
B. 15 units of Product A and 10 units of Product B
C. 20 units of Product A and 30 units of Product B
D. 30 units of Product A and 20 units of Product B

Correct Answer: A

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Question 3
A company's trial balance shows the following balances: Accounts Payable ₦100,000, Sales Revenue ₦500,000, Cost of Goods Sold ₦300,000, and Common Stock ₦200,000. What is the correct formula for calculating the company's net income?
Correct A. Net Income = Sales Revenue - Cost of Goods Sold
B. Net Income = Sales Revenue - Cost of Goods Sold - Accounts Payable
C. Net Income = Sales Revenue - Cost of Goods Sold + Common Stock
D. Net Income = Sales Revenue - Cost of Goods Sold - Accounts Payable + Common Stock

Correct Answer: A

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Question 4
A company uses a self-balancing ledger to record its transactions. The ledger shows the following balances: Cash ₦100,000, Accounts Payable ₦50,000, and Common Stock ₦200,000. What is the correct formula for calculating the company's net worth?
A. Net Worth = Cash + Accounts Payable + Common Stock
Correct B. Net Worth = Cash - Accounts Payable + Common Stock
C. Net Worth = Cash + Accounts Payable - Common Stock
D. Net Worth = Cash - Accounts Payable - Common Stock

Correct Answer: B

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Question 5
A company's balance sheet shows the following balances: Cash ₦150,000, Accounts Payable ₦75,000, and Common Stock ₦250,000. What is the correct formula for calculating the company's total liabilities?
A. Total Liabilities = Cash + Accounts Payable + Common Stock
B. Total Liabilities = Cash - Accounts Payable + Common Stock
Correct C. Total Liabilities = Cash + Accounts Payable - Common Stock
D. Total Liabilities = Cash - Accounts Payable - Common Stock

Correct Answer: C

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Question 6
A company issues 10,000, 10% preference shares of ₦10 each at a premium of ₦5 per share. Calculate the total amount received from the issue of these shares.
A. ₦100,000
Correct B. ₦150,000
C. ₦200,000
D. ₦250,000

Correct Answer: B

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Question 7
A company's cash book shows the following transactions: | Date | Particulars | Debit | Credit | | --- | --- | --- | --- | | 1st Jan | Cash | ₦1,000 | | | 2nd Jan | Sales | | ₦1,500 | | 3rd Jan | Purchases | ₦500 | | | 4th Jan | Cash | | ₦1,000 | Calculate the cash balance on 4th Jan.
A. ₦1,500
Correct B. ₦1,000
C. ₦500
D. ₦0

Correct Answer: B

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Question 8
A company's balance sheet as at 31st Dec is as follows: | Assets | ₦ | Liabilities | ₦ | | --- | --- | --- | --- | | Cash | 10,000 | Share Capital | 50,000 | | Debtors | 20,000 | Profit & Loss | 30,000 | | Stock | 30,000 | | | | | | | | | Liabilities | ₦ | Equity | ₦ | | --- | --- | --- | --- | | Creditors | 15,000 | Retained Earnings | 20,000 | | | | | | | | | | | Calculate the total equity of the company.
A. ₦70,000
B. ₦80,000
C. ₦90,000
Correct D. ₦100,000

Correct Answer: D

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Question 9
A company's cash book shows the following transactions: | Date | Particulars | Debit | Credit | | --- | --- | --- | --- | | 1st Jan | Cash | ₦1,000 | | | 2nd Jan | Sales | | ₦1,500 | | 3rd Jan | Purchases | ₦500 | | | 4th Jan | Cash | | ₦1,000 | Calculate the cash balance on 4th Jan.
A. ₦1,500
Correct B. ₦1,000
C. ₦500
D. ₦0

Correct Answer: B

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Question 10
A company issues 10,000, 10% preference shares of ₦10 each at a premium of ₦5 per share. Calculate the total amount received from the issue of these shares.
A. ₦100,000
Correct B. ₦150,000
C. ₦200,000
D. ₦250,000

Correct Answer: B

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Question 11
A company uses the straight-line method to depreciate its assets. If the asset's useful life is 5 years and the residual value is ₦50,000, what is the annual depreciation charge if the asset's cost is ₦300,000?
A. ₦50,000
Correct B. ₦60,000
C. ₦55,000
D. ₦65,000

Correct Answer: B

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Question 12
A partnership has two partners, A and B. The capital accounts of A and B are ₦200,000 and ₦300,000, respectively. If the profit-sharing ratio is 2:3, what is the total profit for the year?
A. ₦100,000
B. ₦120,000
Correct C. ₦150,000
D. ₦180,000

Correct Answer: C

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Question 13
A company uses the weighted average method to value its inventory. The following data is available: Cost of goods available for sale: ₦500,000; Net realizable value: ₦450,000; Beginning inventory: ₦100,000. What is the cost of goods sold?
Correct A. ₦350,000
B. ₦400,000
C. ₦450,000
D. ₦500,000

Correct Answer: A

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Question 14
A company has the following transactions: Purchased office supplies for ₦20,000; Paid rent for ₦50,000; Sold goods for ₦100,000. What is the total revenue for the year?
A. ₦150,000
B. ₦160,000
Correct C. ₦170,000
D. ₦180,000

Correct Answer: C

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Question 15
A company has the following transactions: Purchased raw materials for ₦100,000; Sold goods for ₦200,000; Paid salaries for ₦50,000. What is the total cost of goods sold?
A. ₦150,000
Correct B. ₦160,000
C. ₦170,000
D. ₦180,000

Correct Answer: B

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Question 16
A company maintains a cash book and a bank statement. The cash book shows a balance of ₦150,000, while the bank statement shows a balance of ₦120,000. The bank statement also shows a credit of ₦30,000 for a dishonored cheque. What is the correct explanation for the difference?
A. The company has a cash surplus of ₦30,000.
Correct B. The company has a cash deficit of ₦30,000.
C. The company has a bank overdraft of ₦30,000.
D. The company has a cash shortage of ₦30,000.

Correct Answer: B

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Question 17
A single entry system is used to record transactions. The journal entry for a sale of goods on credit is: Debit Sales A/c ₦10,000, Credit Debtors A/c ₦10,000. What is the correct classification of this transaction?
Correct A. Trading transaction
B. Non-trading transaction
C. Capital transaction
D. Revenue transaction

Correct Answer: A

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Question 18
A company has two partners, A and B, who share profits and losses in the ratio 3:2. The company's profit for the year is ₦120,000. What is the share of profit for partner A?
A. ₦60,000
Correct B. ₦80,000
C. ₦100,000
D. ₦120,000

Correct Answer: B

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Question 19
A company prepares its final accounts for the year ended 31st December 2022. The trading account shows a gross profit of ₦150,000 and a net profit of ₦80,000. The balance sheet shows a capital of ₦200,000 and a profit and loss appropriation account shows a balance of ₦20,000. What is the correct classification of the balance of the profit and loss appropriation account?
Correct A. Revenue reserve
B. Capital reserve
C. Profit and loss account
D. Dividend account

Correct Answer: A

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Question 20
A company's balance sheet as at 31st December 2022 shows a total assets of ₦500,000 and a total liabilities of ₦300,000. What is the company's net worth?
A. ₦200,000
Correct B. ₦300,000
C. ₦400,000
D. ₦500,000

Correct Answer: B

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Question 21
A company's trial balance shows an error of ¦5,000 due to an incorrect posting of a transaction. The company's accountant has identified that the error is due to an incorrect debit of £5,000 to the office supplies account and an incorrect credit of £5,000 to the office equipment account. What is the correct journal entry to rectify the error?
A. Debit office supplies £5,000, Credit office equipment £5,000
Correct B. Debit office equipment £5,000, Credit office supplies £5,000
C. Debit office supplies £5,000, Credit cash £5,000
D. Credit office supplies £5,000, Debit office equipment £5,000

Correct Answer: B

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Question 22
A company's financial statements for the year ended 31 December 2022 are as follows: Trading profit ¦1,500,000; Profit before tax ¦1,800,000; Taxation ¦1,200,000; Profit after tax ¦1,600,000. What is the company's net profit for the year?
A. ¦1,800,000
Correct B. ¦1,600,000
C. ¦1,500,000
D. ¦1,200,000

Correct Answer: B

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Question 23
A public sector organization's financial statements for the year ended 31 December 2022 are as follows: Revenue ¦1,500,000; Expenditure ¦1,800,000; Surplus/(Deficit) ¦1,200,000. What is the organization's financial position?
Correct A. Surplus
B. Deficit
C. Break-even
D. Unknown

Correct Answer: A

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Question 24
A company's financial statements for the year ended 31 December 2022 are as follows: Trading profit ¦1,500,000; Profit before tax ¦1,800,000; Taxation ¦1,200,000; Profit after tax ¦1,600,000. What is the company's net profit for the year?
A. ¦1,800,000
Correct B. ¦1,600,000
C. ¦1,500,000
D. ¦1,200,000

Correct Answer: B

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Question 25
A company's financial statements for the year ended 31 December 2022 are as follows: Revenue ¦1,500,000; Expenditure ¦1,800,000; Surplus/(Deficit) ¦1,200,000. What is the company's financial position?
Correct A. Surplus
B. Deficit
C. Break-even
D. Unknown

Correct Answer: A

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