Practice gce model questions vol1 financial_accounting 2019 Past Questions

Question 1 View Details

The sales ledger control account opened with a credit balance of \(\text{₦}30,000\). During the year the sales journal recorded total sales of \(\text{₦}120,000\) but the amount was mistakenly posted to the control account as \(\text{₦}12,000\). A credit note for \(\text{₦}5,000\) was issued but not recorded in the sales returns journal. Determine the corrected closing balance of the sales ledger control account.

A. ₦150,000 credit

B. ₦135,000 credit

C. ₦145,000 debit

Correct D. ₦145,000 credit

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 2 View Details

The trade receivables control account shows a closing credit balance of \(\text{₦}250,000\). The total of the individual customer balances in the subsidiary ledger is \(\text{₦}242,000\). During the month a payment of \(\text{₦}8,000\) from Customer A was recorded in the cash book but not posted to the control account, and a sales invoice of \(\text{₦}5,000\) to Customer B was omitted from both the sales journal and the subsidiary ledger. After correcting for these two omissions, what amount of discrepancy remains between the control account and the subsidiary ledger, and is the control account overstated or understated?

A. ₦8,000 understated

B. ₦9,000 overstated

C. ₦7,000 overstated

Correct D. ₦8,000 overstated

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 3 View Details

A local government department had the following budgeted figures for the year: revenue budget \(\text{₦}15,000,000\), expense budget \(\text{₦}12,000,000\). The actual cash receipts were \(\text{₦}14,200,000\) and cash payments were \(\text{₦}11,500,000\). At year‑end the following adjustments were required: \(\text{₦}300,000\) for services received but not yet paid (accrued expense), \(\text{₦}200,000\) provision for doubtful receivables (reduces revenue), a non‑cash grant of \(\text{₦}500,000\) recorded in the income statement but not in cash receipts, and \(\text{₦}400,000\) of revenue earned but not yet received (accrued revenue). Determine the department's reported surplus (or deficit) in the statement of financial performance and the cash surplus (or deficit) for the year.

A. Reported surplus ₦3,300,000; cash surplus ₦2,700,000

B. Reported surplus ₦3,100,000; cash surplus ₦3,100,000

C. Reported surplus ₦2,700,000; cash surplus ₦2,700,000

Correct D. Reported surplus ₦3,100,000; cash surplus ₦2,700,000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 4 View Details

XYZ Ltd. has the following balances at 31 December 2025 (all figures in \(\text{₦}\) thousands):\n\n- Share capital: 500 (ordinary shares, \(\text{₦}1\) each)\n- Retained earnings: 300\n- Revaluation surplus: 120\n- Property, plant and equipment (cost): 800; accumulated depreciation: 200\n- Investment in subsidiary: 250 (carrying amount)\n- Trade receivables: 180\n- Trade payables: 150\n- Bank loan (non‑current): 400\n\nDuring the year the following events occurred:\n1. The company issued 100 new ordinary shares at a premium of \(\text{₦}2\) per share.\n2. A subsidiary was sold for cash proceeds of \(\text{₦}300\) thousand, resulting in a gain on disposal of \(\text{₦}50\) thousand (the carrying amount of the investment was \(\text{₦}250\) thousand).\n3. The property, plant and equipment were revalued upwards by \(\text{₦}100\) thousand, with a corresponding increase in the revaluation surplus.\n4. Depreciation for the year on the remaining PPE was \(\text{₦}80\) thousand.\n5. The company recognised a deferred tax liability of \(\text{₦}30\) thousand on the revaluation surplus and recorded the related tax expense.\n\nPrepare a statement of financial position as at 31 December 2025 after these transactions and state the total equity.

A. ₦1,060,000

Correct B. ₦1,260,000

C. ₦1,290,000

D. ₦1,340,000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 5 View Details

The cash book of ABC Ltd. shows a closing cash balance of \(\text{₦}85,000\) on 31 March. The bank statement for the same date shows a closing balance of \(\text{₦}78,500\). The following items are known:\n- A cheque of \(\text{₦}4,650\) issued on 28 March was not presented to the bank by the statement date.\n- A customer's deposit of \(\text{₦}3,600\) made on 30 March was not yet credited by the bank.\n- Bank charges of \(\text{₦}250\) were deducted by the bank but not yet recorded in the cash book.\n- The bank paid interest on the balance of \(\text{₦}2,000\) which was not recorded in the cash book.\nPrepare a bank reconciliation and state the adjusted cash book balance.

A. ₦87,000

B. ₦85,500

C. ₦84,250

Correct D. ₦86,750

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 6 View Details

A business purchases equipment for cash costing \(\text{₦}45,000\). What is the overall effect of this transaction on the accounting equation (Assets, Liabilities, Equity)?

A. Assets unchanged, Liabilities increase, Equity unchanged

B. Assets increase, Liabilities unchanged, Equity unchanged

Correct C. Assets unchanged, Liabilities unchanged, Equity unchanged

D. Assets unchanged, Liabilities unchanged, Equity decrease

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 7 View Details

Four transactions are recorded as follows:\n1. Received \(\text{₦}6,000\) cash from a customer for services rendered.\n2. Bought office supplies on credit for \(\text{₦}2,500\).\n3. Paid a bank loan instalment of \(\text{₦}3,000\) by cheque.\n4. Corrected an earlier error by debiting Purchases \(\text{₦}1,200\) and crediting Suspense \(\text{₦}1,200\).\nMatch each transaction to the appropriate book of original entry (Cash Book, Purchases Journal, Bank Book, General Journal). List the books in order of transactions 1 to 4.

A. Purchases Journal, Cash Book, Bank Book, General Journal

B. Cash Book, Purchases Journal, General Journal, Bank Book

Correct C. Cash Book, Purchases Journal, Bank Book, General Journal

D. Cash Book, Bank Book, Purchases Journal, General Journal

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 8 View Details

An asset was purchased for \(\text{₦}200,000\) with an estimated residual value of \(\text{₦}20,000\). The company uses the double‑declining‑balance method and records a depreciation expense of \(\text{₦}80,000\) in the first year. Determine the depreciation expense that will be recorded for the second year.

Correct A. 48000

B. 52000

C. 56000

D. 40000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 9 View Details

The cash book balance shown by the company is \(\text{₦}18,500\). The bank statement balance is \(\text{₦}20,300\). The following items are identified:\n- Outstanding checks: \(\text{₦}1,200\) and \(\text{₦}800\).\n- Deposits in transit: \(\text{₦}1,500\) and \(\text{₦}700\).\n- The bank charged a fee of \(\text{₦}50\) that has not been recorded in the cash book.\n- A cheque deposited was recorded in the cash book as \(\text{₦}2,000\) but the bank processed it for \(\text{₦}2,200\).\nAfter making all necessary adjustments, what amount must be added to the cash book balance to bring it into agreement with the bank statement?

Correct A. 1850

B. 1650

C. 2050

D. 1500

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 10 View Details

During posting, two errors were made:\n1. A purchase invoice of \(\text{₦}3,250\) was debited to Purchases and credited to Cash, but the credit should have been to Accounts Payable.\n2. A sales invoice of \(\text{₦}4,800\) was recorded as a debit to Sales and a credit to Cash (the entries were reversed).\nAfter posting, the trial balance shows total debits of \(\text{₦}45,600\) and total credits of \(\text{₦}44,800\). What amount should be transferred to the suspense account to balance the trial balance after correcting the posting errors?

A. 400

B. 1600

Correct C. 800

D. 0

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 11 View Details

Company A acquires 80 % of Company B for \(£480,000\). The fair value of the identifiable net assets of B is \(£500,000\), comprising plant at \(£300,000\) (depreciated to \(£200,000\)), inventory \(£80,000\), receivables \(£70,000\) and liabilities \(£50,000\). The tax base of the plant is \(£250,000\), giving a temporary difference of \(£50,000\). The corporate tax rate is \(30\%\). Calculate the amount of goodwill recognised in the consolidated balance sheet.

Correct A. £172,000

B. £192,000

C. £132,000

D. £152,000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 12 View Details

The cash book balance on 30 June is \(£12,000\). The bank statement balance on the same date is \(£12,500\). Outstanding checks total \(£800\). Deposits in transit amount to \(£300\). The bank has charged a service fee of \(£30\) that has not been recorded in the cash book. One cheque of \(£200\) was returned NSF and is also not yet recorded. The bank mistakenly omitted a deposit of \(£150\) that is shown in the cash book. The company earned bank interest of \(£380\) which is recorded in the cash book but not in the bank statement. Calculate the corrected cash book balance after all adjustments.

A. £12,350

B. £12,050

Correct C. £12,150

D. £12,250

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 13 View Details

A manufacturing firm uses a predetermined overhead rate based on machine hours. Budgeted overhead for the year is \(£240,000\) and budgeted machine hours are 12,000. During the year the actual machine hours were 13,500. Direct material used was \(£180,000\) and direct labour cost was \(£90,000\) (6,000 hours at \(£15\) per hour). Opening work‑in‑process (WIP) inventory was \(£30,000\) and closing WIP was \(£45,000\). Opening finished‑goods inventory was \(£20,000\) and closing finished‑goods inventory was \(£25,000\). Calculate the cost of goods sold for the year.

A. £480,000

Correct B. £520,000

C. £500,000

D. £540,000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 14 View Details

Three partners A, B and C share profit in the ratio \(3:2:1\). Their capital balances are A \(£120,000\), B \(£80,000\) and C \(£40,000\). The partnership revalues a building whose original cost was \(£200,000\) with accumulated depreciation \(£50,000\); the fair value is \(£250,000\). The revaluation surplus is to be shared in the profit‑sharing ratio. Goodwill is valued at two years' average profit; the average profit for the last three years is \(£60,000\). A new partner D is admitted, contributing \(£90,000\) for a 20 % share of the partnership. Determine (a) the total goodwill recognised and the amount credited to each existing partner, and (b) the cash that D must pay to the existing partners for his share.

A. Goodwill £130,000 (A £65,000, B £43,333, C £21,667); cash paid by D £100,000

Correct B. Goodwill £120,000 (A £60,000, B £40,000, C £20,000); cash paid by D £92,000

C. Goodwill £100,000 (A £50,000, B £33,333, C £16,667); cash paid by D £80,000

D. Goodwill £120,000 (A £55,000, B £45,000, C £20,000); cash paid by D £95,000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 15 View Details

A machine was purchased on 1 January 2020 for \(£48,000\). Its original estimated residual value was \(£3,000\) and its useful life was 8 years. After three years the company re‑estimates the residual value to be \(£5,000\) and the remaining useful life to be 5 more years. In the fourth year the machine is used for 2,400 hours out of an estimated total of 12,000 hours for the remaining life. Using the units‑of‑production method for the fourth year, calculate (a) the depreciation expense for the fourth year and (b) the carrying amount of the machine on 31 December 2024.

Correct A. Depreciation expense £5,223; carrying amount £25,903

B. Depreciation expense £4,800; carrying amount £26,315

C. Depreciation expense £5,625; carrying amount £25,490

D. Depreciation expense £5,400; carrying amount £25,715

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 16 View Details

The cash book shows a closing debit balance of \(150,000\). The bank statement shows a closing debit balance of \(145,000\). The following items are identified: outstanding cheques of \(12,000\), deposits in transit of \(8,000\), a bank service charge of \(1,500\) not recorded in the cash book, a cheque recorded as \(5,000\) instead of the correct amount \(3,000\), and a cash receipt of \(2,000\) omitted from the cash book. What should be the corrected cash book balance after adjusting for all errors and omissions?

A. 151500

B. 150500

Correct C. 152500

D. 153500

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 17 View Details

The trade receivables control account opened with a debit balance of \(80,000\). During the year credit sales of \(250,000\) were posted and cash receipts from customers totalling \(210,000\) were credited. The control account shows a closing debit balance of \(120,000\). The subsidiary ledger totals for customers A, B and C are \(30,000\), \(25,000\) and \(20,000\) respectively. What is the balance owed by customer D?

Correct A. 45000

B. 55000

C. 40000

D. 50000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 18 View Details

A manufacturing company provided the following information for the year:\n\n- Opening raw material stock: \(40,000\)\n- Purchases of raw material: \(120,000\)\n- Closing raw material stock: \(30,000\)\n- Opening work‑in‑progress: \(20,000\)\n- Closing work‑in‑progress: \(25,000\)\n- Opening finished goods: \(35,000\)\n- Closing finished goods: \(40,000\)\n- Direct labour cost: \(80,000\)\n- Manufacturing overhead is applied at \(150\%\) of direct labour.\n- Actual overhead incurred: \(115,000\)\n- By‑product sold for: \(10,000\)\n- Sales revenue: \(340,000\)\n- Sales returns: \(10,000\)\n\nCalculate the gross profit for the year, taking into account the overhead absorption variance and the by‑product sale.

Correct A. 25000

B. 30000

C. 35000

D. 20000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 19 View Details

A business has total assets of \(500,000\) and total liabilities of \(200,000\). Using the accounting equation, what is the amount of owner's equity?

A. 500000

B. 700000

C. 200000

Correct D. 300000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 20 View Details

A company purchases equipment on credit for a total cost of \(70,000\), of which \(50,000\) is payable to a supplier and the remaining \(20,000\) is financed by a note payable. Record the journal entry for this transaction using the double‑entry system.

Correct A. Debit Equipment 70,000; Credit Accounts Payable 50,000; Credit Notes Payable 20,000

B. Debit Equipment 70,000; Credit Accounts Payable 20,000; Credit Notes Payable 50,000

C. Debit Equipment 50,000; Credit Accounts Payable 50,000; Credit Notes Payable 20,000

D. Debit Equipment 70,000; Credit Accounts Payable 50,000; Debit Notes Payable 20,000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 21 View Details

During the preparation of a trial balance, the total debits amount to \(\text{₦}452{,}000\) and the total credits amount to \(\text{₦}447{,}000\). Two adjusting entries are then posted: (i) Accrued salaries of \(\text{₦}3{,}200\) (debit Salaries Expense, credit Salaries Payable) and (ii) Prepaid rent of \(\text{₦}1{,}500\) (debit Prepaid Rent, credit Rent Expense). After these entries the trial balance still does not balance. It is discovered that a single entry was mistakenly recorded as a debit to the Purchases ledger when it should have been a credit. Determine the amount of that erroneous entry.

A. 3000

Correct B. 2500

C. 5000

D. 1500

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 22 View Details

The income statement of XYZ Ltd shows a gross profit of \(\text{₦}120{,}000\). The opening inventory was \(\text{₦}30{,}000\), purchases during the year were \(\text{₦}80{,}000\) and the closing inventory was \(\text{₦}25{,}000\). Operating expenses before depreciation total \(\text{₦}45{,}000\). Plant and equipment cost \(\text{₦}100{,}000\) with accumulated depreciation at the start of the year of \(\text{₦}40{,}000\). Depreciation is calculated using the reducing‑balance method at 20 % per annum and no disposals occurred. What is the net profit for the year?

A. 65000

B. 70000

C. 58000

Correct D. 63000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 23 View Details

Under the accrual basis of accounting, revenue is recognised at the point when it is ___.

A. realized

Correct B. earned

C. received

D. collected

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 24 View Details

The cash book shows a closing cash balance of \(\text{₦}85{,}000\). The bank statement for the same date shows a balance of \(\text{₦}78{,}000\). The following items are identified: (i) Deposits in transit of \(\text{₦}5{,}200\), (ii) Bank charges of \(\text{₦}300\) not yet recorded in the cash book, (iii) A customer's cheque of \(\text{₦}1{,}800\) that has been recorded in the cash book but not yet cleared, and (iv) A payment of \(\text{₦}2{,}500\) that was recorded as a debit instead of a credit in the cash book. After adjusting the cash book for all items, what is the corrected cash book balance?

A. 80200

Correct B. 79700

C. 78500

D. 77000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 25 View Details

A local government authority prepares its annual financial statements on a modified accrual basis. The following figures (in \(\text{₦}\) thousands) are given:\n\n- Tax revenue: 120,000\n- Grants received: 30,000\n- Operating expenses (excluding depreciation): 100,000\n- Depreciation on capital assets (straight‑line): 8,000\n- Interest expense on borrowed funds: 5,000\n- Transfer to a special road‑maintenance fund: 15,000 (a reallocation, not an expense)\n\nAt the start of the year the capital fund reported a surplus of 20,000, and at the end of the year the surplus was 10,000. Determine the change in net assets (net financial position change) for the authority for the year, taking into account the special‑fund transfer and the change in the capital‑fund surplus.

A. 13000

B. 15000

C. 11000

Correct D. 12000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

gce model questions vol1 2019 financial_accounting | Objective

Master the Exam!

Help others prepare! Share this practice hub: