Practice gce model questions vol1 financial_accounting 2022 Past Questions

Question 1 View Details

A company's cash book shows a balance of \(\text{₦}14,850\). The bank statement balance is \(\text{₦}15,200\). Outstanding checks are \(\text{₦}420\), \(\text{₦}560\) and an unknown amount \(X\). Deposits in transit total \(\text{₦}300\) and \(\text{₦}480\). A bank error recorded a cheque as \(\text{₦}250\) instead of the correct \(\text{₦}200\). After reconciling, the adjusted cash book balance must equal the adjusted bank balance of \(\text{₦}15,000\). What is the value of \(X\)?

A. 150

B. 200

Correct C. 100

D. 80

Correct Answer: C

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Question 2 View Details

The trial balance of a firm is balanced at \(\text{₦}48,750\) on each side. The following ledger balances are known (all amounts are debits unless stated as credit):\n\nDebit balances: Purchases \(\text{₦}12,300\), Salaries \(\text{₦}8,450\), Rent \(\text{₦}3,200\), Drawings \(\text{₦}2,500\), Machinery \(\text{?}\).\n\nCredit balances: Sales \(\text{₦}22,000\), Capital \(\text{₦}15,000\), Interest Received \(\text{₦}1,000\).\n\nWhat is the balance of the Machinery account?

A. 10550

B. 12550

Correct C. 11550

D. 11000

Correct Answer: C

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Question 3 View Details

On 15 June the company paid its electricity bill of \(\text{₦}4,800\) in cash. Record the double‑entry journal for this transaction.

A. Debit Utilities Expense ₦5,000; Credit Cash ₦5,000

B. Debit Electricity Expense ₦4,800; Credit Cash ₦4,800

Correct C. Debit Utilities Expense ₦4,800; Credit Cash ₦4,800

D. Debit Utilities Expense ₦4,800; Credit Accounts Payable ₦4,800

Correct Answer: C

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Question 4 View Details

A trial balance shows total debits of \(\text{₦}40,800\) and total credits of \(\text{₦}39,500\). The difference of \(\text{₦}1,300\) is due to a sales invoice of amount \(X\) that was mistakenly debited to the Sales account instead of being credited. Determine the value of \(X\) and the amount that should be transferred to the suspense account to restore balance.

A. Sales invoice amount ₦800; amount to transfer to suspense account ₦1,600

Correct B. Sales invoice amount ₦650; amount to transfer to suspense account ₦1,300

C. Sales invoice amount ₦1,300; amount to transfer to suspense account ₦1,300

D. Sales invoice amount ₦650; amount to transfer to suspense account ₦650

Correct Answer: B

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Question 5 View Details

A machine was purchased on 1 March 2022 for \(\text{₦}120,000\). The company depreciates it using the reducing‑balance method at a rate of 25 % per annum. The machine was sold on 30 September 2024 for \(\text{₦}30,000\). Calculate the profit or loss on disposal, rounding the final answer to the nearest naira.

Correct A. Loss of ₦27,891

B. Loss of ₦26,500

C. Loss of ₦28,000

D. Profit of ₦2,500

Correct Answer: A

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Question 6 View Details

The following transactions were recorded in the journal: 1. Purchased inventory on credit for ₦45,000. 2. Sold goods for cash ₦60,000; cost of goods sold ₦36,000. 3. Paid wages cash ₦12,000. 4. Received a bank loan, amount unknown, recorded as a debit to cash and a credit to loan payable. If the total of all debit entries in the journal equals ₦210,000, what is the amount of the bank loan?

A. 45000

B. 60000

Correct C. 57000

D. 72000

Correct Answer: C

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Question 7 View Details

A business records revenue only when cash is received, ignoring sales made on credit. Which fundamental accounting concept is being violated?

A. Matching concept

B. Conservatism concept

C. Cash basis concept

Correct D. Accruals (revenue‑recognition) concept

Correct Answer: D

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Question 8 View Details

An equipment costing \(\text{₦}200,000\) with a residual value of \(\text{₦}20,000\) is to be depreciated over 5 years. The company uses straight‑line depreciation for the first two years and then switches to the reducing‑balance method at \(40\%\) per annum on the remaining book value. What is the book value at the end of year \(4\)?

Correct A. 46080

B. 48000

C. 52000

D. 40000

Correct Answer: A

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Question 9 View Details

For the year ended 31 March, the following information is available: Sales: \(\text{£}250,000\) Opening stock: \(\text{£}30,000\) Purchases: \(\text{£}120,000\) Purchases returns: \(\text{£}5,000\) Closing stock: \(\text{£}28,000\) Carriage inwards: \(\text{£}3,000\) Wages: \(\text{£}12,000\) Rent expense: \(\text{£}9,000\) Depreciation on equipment (straight‑line): \(\text{£}6,000\) Bad debts written off: \(\text{£}2,500\) Interest received: \(\text{£}1,200\) No other incomes or expenses are recorded. Calculate the net profit for the year.

Correct A. 101700

B. 102200

C. 100700

D. 98700

Correct Answer: A

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Question 10 View Details

During the preparation of the trial balance, a difference of \(\text{₦}4,500\) (debit side higher) was found. Investigation revealed that a credit sale of \(\text{₦}4,500\) was mistakenly recorded as a debit to the Purchases account. What correcting journal entries should be passed, using the suspense account, to rectify the trial balance?

A. 1) Debit Purchases ₦4,500, Credit Suspense ₦4,500; 2) Debit Suspense ₦4,500, Credit Sales ₦4,500

B. 1) Debit Sales ₦4,500, Credit Purchases ₦4,500; 2) Debit Suspense ₦4,500, Credit Suspense ₦4,500

C. 1) Debit Suspense ₦4,500, Credit Sales ₦4,500; 2) Debit Purchases ₦4,500, Credit Suspense ₦4,500

Correct D. 1) Debit Suspense ₦4,500, Credit Purchases ₦4,500; 2) Debit Sales ₦4,500, Credit Suspense ₦4,500

Correct Answer: D

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Question 11 View Details

A local authority prepares its statement of financial activities. The opening cash balance was £(120{,}000) and opening net assets (excluding cash) were £(80{,}000). During the year the following cash transactions occurred: tax revenue received £(250{,}000), grant revenue received £(80{,}000), interest income received £(5{,}000), prepaid income received in advance £(6{,}000), salaries paid £(150{,}000), supplies paid £(30{,}000), interest expense paid £(4{,}000) and capital expenditure paid £(100{,}000). At year‑end the cash balance is £(115{,}000). In addition, the authority incurred accrued expenses of £(12{,}000) not yet paid and recorded depreciation of £(20{,}000). Assuming no other transactions, calculate the surplus for the year on an accrual basis.

A. £139,000

Correct B. £119,000

C. £131,000

D. £125,000

Correct Answer: B

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Question 12 View Details

The following trial‑balance figures (in £) are extracted from the books of a trading company: sales £(500{,}000), purchases £(300{,}000), opening stock £(40{,}000), closing stock £(55{,}000), purchase returns £(20{,}000), carriage inwards £(5{,}000), carriage outwards £(7{,}000), wages £(30{,}000), salaries £(45{,}000), depreciation (building) £(12{,}000), depreciation (machinery) £(8{,}000), trade receivables £(150{,}000) (existing provision for doubtful debts £(4{,}000)), trade payables £(80{,}000), other expenses £(10{,}000) and interest income £(2{,}000). The company wishes to prepare a profit and loss account. Assuming the new provision for doubtful debts should be 6 % of trade receivables, calculate the net profit for the year.

A. £135,000

Correct B. £115,000

C. £120,000

D. £100,000

Correct Answer: B

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Question 13 View Details

The cash book (debit side) shows a balance of £(25{,}800) at 31 March. The bank statement for the same date shows a credit balance of £(27{,}500). The following items are noted:\n- Outstanding checks: £(3{,}200)\n- Deposits in transit: £(1{,}500)\n- Bank fee not recorded in the cash book: £(120)\n- Customer's cheque returned unpaid (bounced): £(800)\n- Interest earned by the bank, not recorded in the cash book: £(2{,}000)\n- Bank error: the bank credited £(500) to the account that should have been debited.\nDetermine the adjusted cash‑book balance after making the necessary entries.

Correct A. £26,880

B. £24,880

C. £27,880

D. £25,880

Correct Answer: A

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Question 14 View Details

A manufacturing company reports the following data (all figures in £): opening raw‑materials stock £(40{,}000), purchases of raw materials £(120{,}000), closing raw‑materials stock £(35{,}000); opening work‑in‑progress £(25{,}000), closing work‑in‑progress £(30{,}000); direct labour £(80{,}000); overhead is applied at £(5) per machine hour and 12 000 machine hours were recorded; actual manufacturing overhead incurred £(58{,}000); opening finished‑goods stock £(50{,}000), closing finished‑goods stock £(45{,}000); sales revenue £(300{,}000); selling and distribution expenses £(20{,}000); administrative expenses £(15{,}000). Compute the gross profit for the year after adjusting for any over‑ or under‑applied overhead.

A. £40,000

B. £35,000

Correct C. £37,000

D. £32,000

Correct Answer: C

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Question 15 View Details

The following trial‑balance (in £) shows a missing figure for purchases. Debit side: sales returns £(5{,}000), opening stock £(40{,}000), closing stock £(55{,}000), salaries £(30{,}000), rent expense £(12{,}000), bank £(20{,}000). Credit side: sales £(200{,}000), capital £(100{,}000), trade payables £(25{,}000), loan £(15{,}000), interest income £(3{,}000). The total of the credit side is £(343{,}000). Determine the amount that should be entered for purchases on the debit side so that the trial balance balances.

A. £171,000

B. £180,000

C. £186,000

Correct D. £181,000

Correct Answer: D

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Question 16 View Details

Company A prepared its trial balance for the year ended 31 December 2022. The following items are shown (all figures in \(\text{₦}\)): Share capital \(500,000\); Revaluation surplus \(120,000\); Opening retained earnings \(80,000\); Net profit before tax (excluding depreciation) \(150,000\); Tax rate \(30\%\); Plant and machinery cost \(300,000\); Accumulated depreciation at the start of the year \(90,000\); Residual value of the plant \(30,000\); Useful life \(10\) years; The plant has been in use for 5 years at the start of the year. No disposals occurred during the year. The depreciation policy requires that at the end of each year the accumulated depreciation must equal \((\text{Cost} - \text{Residual}) \times (\text{Years elapsed} / \text{Useful life})\). Determine the total equity shown in the statement of financial position after all adjustments.

Correct A. 754,600

B. 744,600

C. 759,600

D. 754,000

Correct Answer: A

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Question 17 View Details

The cash book of XYZ Ltd shows a cash‑at‑bank balance of \(\text{₦}45,000\) on 31 March 2022. The following items relate to the same period: (i) A cheque for \(\text{₦}1,200\) was mistakenly recorded as \(\text{₦}1,020\); (ii) Bank charges of \(\text{₦}500\) appear on the bank statement only; (iii) Interest earned of \(\text{₦}200\) appears on the bank statement only. Determine the corrected cash‑at‑bank balance after incorporating all adjustments.

A. 44,480

B. 44,720

Correct C. 44,520

D. 45,020

Correct Answer: C

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Question 18 View Details

A local authority received a restricted grant of \(\text{₦}1,200,000\) intended to fund a capital project costing \(\text{₦}1,500,000\). During the year it incurred \(\text{₦}900,000\) of the project expenditure. According to public‑sector accounting rules, the portion of the grant that can be recognised as income is proportional to the expenditure incurred. Calculate the amount of the restricted grant that must be shown as a deferred liability at year‑end.

A. 600,000

B. 300,000

C. 720,000

Correct D. 480,000

Correct Answer: D

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Question 19 View Details

The following journal entries were posted in April 2022. Opening cash balance on 1 April was \(\text{₦}4,000\). (1) 5 Apr - Cash sales \(\text{₦}12,000\); Cost of goods sold \(\text{₦}7,200\). (2) 12 Apr - Purchased inventory on credit \(\text{₦}5,000\) and paid freight \(\text{₦}200\) in cash. (3) 20 Apr - Paid cash to settle part of accounts payable \(\text{₦}3,000\). Determine the cash balance at 30 April after posting all entries.

A. 12,000

B. 13,000

Correct C. 12,800

D. 9,800

Correct Answer: C

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Question 20 View Details

The manufacturing accounts of Beta Ltd for the year ended 31 December 2022 contain the following data (all figures in \(\text{₦}\)): Opening raw‑material stock 50,000; Purchases of raw materials 120,000; Closing raw‑material stock 40,000; Direct labour incurred 80,000; Factory overhead applied at 150 % of direct labour; Actual factory overhead incurred 130,000; Opening work‑in‑progress 30,000; Closing work‑in‑progress 25,000; Opening finished‑goods stock 20,000; Closing finished‑goods stock 15,000; Sales revenue 500,000; Selling and distribution expenses 50,000; Administrative expenses 40,000. Compute the net profit for the period.

A. 45,000

Correct B. 60,000

C. 70,000

D. 55,000

Correct Answer: B

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Question 21 View Details

After posting the following entries to the Purchases Ledger, the ledger shows a net debit balance of \(\text{₦}6,000\). Determine the amount of purchase returns recorded. Entries: 1. Purchases on credit: \(\text{₦}80,000\) (debit). 2. Freight‑in: \(\text{₦}4,000\) (debit). 3. Purchase returns: amount unknown (credit).

A. 74,000

Correct B. 78,000

C. 82,000

D. 70,000

Correct Answer: B

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Question 22 View Details

The cash book for the month has the following information. Opening cash balance: \(\text{₦}50,000\). Cash receipts recorded: cash sales \(\text{₦}120,000\), collections from debtors \(\text{₦}30,000\), other receipts \(X\). Cash payments recorded: purchases \(\text{₦}70,000\), wages \(\text{₦}25,000\), rent \(\text{₦}15,000\), other payments \(Y\). The trial balance shows total expenses of \(\text{₦}130,000\) (which include wages, rent and the unknown payment \(Y\)). A bank reconciliation gives a bank statement closing balance of \(\text{₦}40,000\), outstanding checks of \(\text{₦}12,000\) and deposits in transit of \(\text{₦}8,000\). Determine the amount of the unknown cash receipt \(X\).

A. 36,000

B. 40,000

C. 48,000

Correct D. 44,000

Correct Answer: D

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Question 23 View Details

A partnership's trial balance at year‑end contains the following items (all amounts in \(\text{₦}\)). Assets: - Cash: 20,000 (debit) - Debtors: 35,000 (debit) - Inventory: 45,000 (debit) - Equipment (cost): 60,000 (debit) - Accumulated depreciation: amount unknown (credit) - Pre‑paid expenses: 5,000 (debit) Liabilities: - Sundry creditors: amount unknown (credit) - Bank loan: 30,000 (credit) Equity: - Capital: 80,000 (credit) - Drawings: 10,000 (debit) - Net profit: 15,000 (credit) Additional information: - Depreciation on equipment for the year is \(\text{₦}12,000\). - Accumulated depreciation at the beginning of the year was \(\text{₦}8,000\). Determine the amount of Sundry creditors that will balance the trial balance.

Correct A. 30,000

B. 25,000

C. 35,000

D. 40,000

Correct Answer: A

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Question 24 View Details

The following transactions were recorded in a two‑column cash book (cash and bank) for the month. Opening balances: - Cash: \(\text{₦}12,000\) - Bank (overdraft): \(\text{₦}5,000\) (i.e., a negative balance) Transactions: 1. Cash sales: \(\text{₦}30,000\) (cash receipt). 2. Rent paid by cheque: \(\text{₦}8,000\) (bank payment). 3. Bank loan received: \(\text{₦}20,000\) (bank receipt). 4. Transfer of cash to bank: \(\text{₦}5,000\) (cash payment, bank receipt). 5. Wages paid in cash: \(\text{₦}12,000\) (cash payment). 6. Supplier paid in cash: \(\text{₦}4,000\) (cash payment). 7. Bank charges: \(\text{₦}200\) (bank payment). Calculate the closing cash balance and the closing bank balance (state the bank balance as a positive amount if in credit, or as an overdraft if negative).

A. Cash: 22,000; Bank: 11,800

B. Cash: 21,000; Bank: 12,000

Correct C. Cash: 21,000; Bank: 11,800

D. Cash: 20,000; Bank: 11,600

Correct Answer: C

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Question 25 View Details

Partners A and B originally share profits in the ratio 3:2. The partnership's goodwill is valued at \(\text{₦}120,000\). New partner C is admitted, contributing \(\text{₦}48,000\) for a 20% share of future profits. Existing partners agree that goodwill will be shared between A and B in their old profit‑sharing ratio. After admission, a piece of equipment is re‑valued, giving a gain of \(\text{₦}15,000\) which will be shared according to the new profit‑sharing ratio. Determine: (a) The new profit‑sharing ratio among A, B and C. (b) The amount of the re‑valuation gain each partner will receive.

A. Ratio 12:8:5; A receives ₦7,500, B receives ₦4,500, C receives ₦3,000

B. Ratio 12:8:5; A receives ₦9,000, B receives ₦6,000, C receives ₦0

C. Ratio 3:2:1; A receives ₦7,500, B receives ₦5,000, C receives ₦2,500

Correct D. Ratio 12:8:5; A receives ₦7,200, B receives ₦4,800, C receives ₦3,000

Correct Answer: D

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