Practice gce model questions vol1 financial_accounting 2025 Past Questions

Question 1 View Details

A purchase of goods on credit for \(\text{₦}120{,}000\) was mistakenly recorded as a cash purchase of the same amount. Later the correct cash purchase entry was recorded, but the credit purchase was omitted. The accountant decides to correct the error using a suspense account. Assuming the trial balance was balanced before the correction, what balance (debit or credit and amount) should be shown in the suspense account after all correcting entries are made?

A. Debit \(\text{₦}60{,}000\)

B. Credit \(\text{₦}60{,}000\)

Correct C. Credit \(\text{₦}120{,}000\)

D. Debit \(\text{₦}120{,}000\)

Correct Answer: C

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Question 2 View Details

The following information relates to XYZ Ltd for the year ended 31 March 2025:\n\n- Opening stock: \(\text{₦}200{,}000\)\n- Purchases: \(\text{₦}800{,}000\)\n- Carriage inwards: \(\text{₦}50{,}000\)\n- Closing stock: \(\text{₦}250{,}000\)\n- Trading profit before adjustments (gross profit): \(\text{₦}500{,}000\)\n- Administrative expenses: \(\text{₦}150{,}000\)\n- Selling expenses: \(\text{₦}100{,}000\)\n- Plant cost: \(\text{₦}400{,}000\) depreciated at 10% p.a.\n- Revaluation surplus on land recognised: \(\text{₦}30{,}000\)\n\nCalculate the profit for the year that will be transferred to retained earnings.

Correct A. ₦210,000

B. ₦200,000

C. ₦250,000

D. ₦190,000

Correct Answer: A

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Question 3 View Details

A manufacturing company produces a single product. The following data are for the year ended 31 December 2025:\n\n- Opening work‑in‑progress (WIP): \(\text{₦}50{,}000\)\n- Closing WIP: \(\text{₦}70{,}000\)\n- Opening finished goods (FG): \(\text{₦}30{,}000\)\n- Closing finished goods: \(\text{₦}20{,}000\)\n- Opening raw materials: \(\text{₦}20{,}000\)\n- Purchases of raw materials: \(\text{₦}200{,}000\)\n- Closing raw materials: \(\text{₦}40{,}000\)\n- Direct labour cost: \(\text{₦}120{,}000\)\n- Variable overhead applied at 150% of direct labour cost\n- Fixed overhead: \(\text{₦}80{,}000\)\n- Units produced: 2,000\n- Units sold: 1,800\n- Selling price per unit: \(\text{₦}500\)\n\nCalculate the profit for the year.

Correct A. ₦350,000

B. ₦360,000

C. ₦300,000

D. ₦340,000

Correct Answer: A

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Question 4 View Details

A parent company acquires 80% of the shares of Subsidiary Co for \(\text{₦}1{,}200{,}000\). The fair value of the subsidiary's identifiable net assets at acquisition is \(\text{₦}1{,}000{,}000\) and a fair‑value adjustment of \(\text{₦}200{,}000\) is made to plant (undervalued). During the year the subsidiary reports profit after tax of \(\text{₦}300{,}000\) and pays dividends of \(\text{₦}100{,}000\) to the parent. Goodwill is amortised on a straight‑line basis over 5 years.\n\nCalculate (a) the annual amortisation charge on goodwill attributable to the parent, and (b) the amount of profit attributable to non‑controlling interest to be shown in the consolidated income statement.

A. (a) ₦60,000; (b) ₦48,000

Correct B. (a) ₦48,000; (b) ₦60,000

C. (a) ₦40,000; (b) ₦70,000

D. (a) ₦48,000; (b) ₦50,000

Correct Answer: B

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Question 5 View Details

The records of a sole trader are incomplete. The following information is available for the year ended 31 December 2025:\n\n- Opening stock: \(\text{₦}150{,}000\)\n- Purchases (recorded): \(\text{₦}500{,}000\)\n- Sales: \(\text{₦}1{,}200{,}000\)\n- Closing stock: \(\text{₦}180{,}000\)\n- Carriage outwards: \(\text{₦}30{,}000\)\n- Administrative expenses: \(\text{₦}120{,}000\)\n- Furniture cost: \(\text{₦}80{,}000\) (depreciated straight‑line over 8 years)\n- Cash withdrawn for personal use: \(\text{₦}50{,}000\)\n- A discount of 5% was received on purchases exceeding \(\text{₦}400{,}000\) but was not recorded.\n\nUsing the above data, determine the net profit for the year.

A. ₦525,000

Correct B. ₦575,000

C. ₦580,000

D. ₦570,000

Correct Answer: B

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Question 6 View Details

The cash book for the month shows an opening balance of \(\text{₦}12,000\). During the month the following receipts were recorded: cash sales \(\text{₦}45,600\), a loan received \(\text{₦}8,000\) and a customer payment \(\text{₦}5,500\). The cash sales receipt was entered twice. Payments recorded are rent \(\text{₦}12,000\), salaries \(\text{₦}15,300\) and a petty‑cash replenishment \(\text{₦}2,500\). A purchase of inventory costing \(\text{₦}20,400\) was omitted from the cash book. The business also maintains a petty‑cash float of \(\text{₦}1,200\) which is not shown in the cash book. What is the corrected closing cash balance at the end of the month?

A. 20900

Correct B. 19700

C. 65300

D. 41300

Correct Answer: B

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Question 7 View Details

A trial balance before any adjustments shows total debits of \(\text{₦}152,340\) and total credits of \(\text{₦}150,120\). The accountant discovers two errors: (i) a purchase invoice of \(\text{₦}7,560\) was omitted from the purchases ledger (debit side) and (ii) a sales invoice of \(\text{₦}3,340\) was recorded as \(\text{₦}3,430\) (a transposition error) in the sales ledger (credit side). After correcting these errors, what amount should be transferred to the suspense account to balance the trial balance?

Correct A. 9870

B. 9690

C. 9780

D. 2310

Correct Answer: A

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Question 8 View Details

Three partners A, B and C share profits in the ratio 3:2:1. Their year‑end capital balances are A \(\text{₦}120,000\), B \(\text{₦}80,000\) and C \(\text{₦}40,000\). Goodwill of the partnership is valued at \(\text{₦}30,000\). A new partner D is admitted, paying cash of \(\text{₦}50,000\) for a 20 % share of future profits. The partners agree that goodwill will be shared in the new profit‑sharing ratio, i.e. A:B:C:D = 25 % : 15 % : 5 % : 20 %. Determine (a) the amount of goodwill each partner receives (or pays) and (b) the adjusted capital balances of A, B, C and D immediately after D's admission.

A. Goodwill allocation - A:12000, B:8000, C:4000, D:6000; Adjusted capitals - A:131000, B:88000, C:44000, D:50000

B. Goodwill allocation - A:15000, B:10000, C:5000, D:0; Adjusted capitals - A:150000, B:100000, C:50000, D:50000

Correct C. Goodwill allocation - A:12000, B:8000, C:4000, D:6000; Adjusted capitals - A:132000, B:88000, C:44000, D:50000

D. Goodwill allocation - A:12000, B:8000, C:4000, D:5000; Adjusted capitals - A:132000, B:88000, C:44000, D:45000

Correct Answer: C

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Question 9 View Details

A trial balance initially balances with total debits and credits each equal to \(\text{₦}200,000\). Later the accountant discovers two mistakes: (i) a purchase of \(\text{₦}9,800\) was mistakenly recorded as a purchase return (credit) and (ii) a sales entry of \(\text{₦}6,750\) was recorded as a purchase (debit). After correcting both errors, what amount should be transferred to or from the suspense account to restore balance?

Correct A. 6100

B. 0

C. 9150

D. 3050

Correct Answer: A

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Question 10 View Details

The cash book shows a closing balance of \(\text{₦}85,400\). The bank statement for the same date shows a closing balance of \(\text{₦}88,200\). The following items are identified:\n- Deposits in transit: \(\text{₦}1,680\).\n- Outstanding checks: \(\text{₦}2,300\) and \(\text{₦}1,150\).\n- Bank service charge of \(\text{₦}120\) not yet recorded in the cash book.\n- Interest earned on the bank balance of \(\text{₦}250\) not yet recorded in the cash book.\n- A cheque deposited by the company for \(\text{₦}3,200\) was incorrectly entered in the cash book as \(\text{₦}2,300\).\nPrepare the bank reconciliation and state the adjusted cash book balance after all necessary entries have been recorded.

A. 86180

Correct B. 86430

C. 85530

D. 86550

Correct Answer: B

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Question 11 View Details

A company purchases equipment for cash costing \(\text{₦}150,000\). It also receives a loan of \(\text{₦}50,000\) which is immediately used to pay a supplier invoice of \(\text{₦}30,000\). Determine the net effect of these transactions on the accounting equation \(\text{Assets}=\text{Liabilities}+\text{Equity}\). Express your answer as the change in Assets, Liabilities and Equity.

A. Assets increase \(\text{₦}50,000\); Liabilities increase \(\text{₦}20,000\); Equity decrease \(\text{₦}30,000\).

Correct B. Assets increase \(\text{₦}20,000\); Liabilities increase \(\text{₦}20,000\); Equity unchanged.

C. Assets increase \(\text{₦}20,000\); Liabilities unchanged; Equity increase \(\text{₦}20,000\).

D. Assets increase \(\text{₦}20,000\); Liabilities increase \(\text{₦}10,000\); Equity increase \(\text{₦}10,000\).

Correct Answer: B

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Question 12 View Details

A manufacturing firm produces a single product. The following data relate to the year: - Opening raw‑material stock: \(\text{₦}80,000\) - Purchases of raw material: \(\text{₦}120,000\) - Closing raw‑material stock: \(\text{₦}70,000\) - Direct labour cost: \(\text{₦}90,000\) - Manufacturing overhead is applied at 150 % of direct labour cost. - Opening work‑in‑progress (WIP): \(\text{₦}30,000\) - Closing WIP: \(\text{₦}25,000\) - Opening finished‑goods stock: \(\text{₦}50,000\) - Closing finished‑goods stock: \(\text{₦}55,000\) - Sales revenue: \(\text{₦}500,000\) - Selling & distribution expenses: \(\text{₦}40,000\) - Administrative expenses: \(\text{₦}30,000\) Calculate the net profit for the period.

Correct A. ₦75,000

B. ₦65,000

C. ₦95,000

D. ₦85,000

Correct Answer: A

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Question 13 View Details

A local authority reports the following figures for the financial year:\n- Cash revenue receipts: \(\text{₦}200,000\)\n- Cash expenditure payments: \(\text{₦}180,000\)\n- Accrued revenue not yet received: \(\text{₦}25,000\)\n- Accrued expenditure incurred but not yet paid: \(\text{₦}15,000\)\n- Depreciation expense (non‑cash): \(\text{₦}10,000\)\n- Transfer payments received in cash: \(\text{₦}30,000\)\n- Transfer payments made in cash: \(\text{₦}20,000\)\nCalculate the surplus (or deficit) for the period using (a) the adjusted cash basis and (b) the accrual basis. Ignore depreciation in both calculations.

Correct A. Adjusted cash surplus: ₦30,000; Accrual surplus: ₦40,000

B. Adjusted cash surplus: ₦20,000; Accrual surplus: ₦30,000

C. Adjusted cash surplus: ₦30,000; Accrual surplus: ₦30,000

D. Adjusted cash surplus: ₦30,000; Accrual surplus: ₦50,000

Correct Answer: A

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Question 14 View Details

The trial balance of a sole trader for the year shows:\n- Sales: \(\text{₦}600,000\)\n- Opening inventory: \(\text{₦}80,000\)\n- Purchases: \(\text{₦}250,000\)\n- Closing inventory: \(\text{₦}70,000\)\n- Operating expenses (excluding depreciation): \(\text{₦}120,000\)\n- Plant cost: \(\text{₦}200,000\) (depreciated straight‑line at 10 % per annum, no residual value)\n- Interest expense: \(\text{₦}15,000\)\nDetermine the net profit for the year.

Correct A. ₦185,000

B. ₦195,000

C. ₦205,000

D. ₦200,000

Correct Answer: A

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Question 15 View Details

The cash book shows a closing balance of \(\text{₦}45,000\). The bank statement shows a closing balance of \(\text{₦}48,000\). The following items relate to the period:\n- A cheque of \(\text{₦}5,000\) was issued and recorded in the cash book but has not yet been presented to the bank.\n- A cash deposit of \(\text{₦}3,000\) made on the last day of the month was not recorded in the cash book.\n- The bank charged a service fee of \(\text{₦}200\) which was not recorded in the cash book.\n- A customer's cheque of \(\text{₦}2,500\) was dishonoured and returned by the bank; it had been credited to the cash book.\nPrepare the bank reconciliation and state the corrected cash‑book balance after all adjustments.

A. Corrected cash‑book balance: ₦45,200

B. Corrected cash‑book balance: ₦44,800

Correct C. Corrected cash‑book balance: ₦45,300

D. Corrected cash‑book balance: ₦45,800

Correct Answer: C

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Question 16 View Details

A machine was purchased for £120,000. It has an estimated residual value of £12,000 and a useful life of 8 years. The company depreciated the machine using the straight‑line method for the first 3 years and then switched to the reducing‑balance method at a rate of 25 % per annum on the remaining book value. What is the book value of the machine at the end of year 5?

A. £42,187.50

B. £50,880.00

C. £52,500.00

Correct D. £44,718.75

Correct Answer: D

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Question 17 View Details

The trial balance of XYZ Ltd shows the following items (all figures in £): Sales 250,000; Purchases 150,000; Opening stock 30,000; Salaries expense 20,000; Rent expense 12,000; Equipment cost 80,000 (residual value 8,000, useful life 8 years). At year‑end a prepaid rent of £3,000 is recorded and interest of £2,000 is accrued but not yet paid. The tax expense for the year is £5,000 and profit after tax is £30,000. Assuming straight‑line depreciation for the equipment, determine the value of the closing stock.

A. £3,000

B. £8,000

C. £5,500

Correct D. £5,000

Correct Answer: D

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Question 18 View Details

Three partners A, B and C share profits in the ratio 3 : 2 : 1. Their capital balances at the beginning of the year are £60,000, £40,000 and £20,000 respectively. The firm revalues its assets: the building is increased by £15,000 and equipment is decreased by £5,000. Goodwill is valued at £24,000 and is to be shared among the existing partners in their old profit‑sharing ratio. A new partner D is admitted, contributing £30,000 in cash for a 20 % share of future profits. After admission the profit‑sharing ratios become A : B : C : D = 2.5 : 2 : 1.5 : 2. Calculate (i) the amount of goodwill credited to each existing partner, (ii) the revaluation surplus credited to each existing partner, and (iii) the new capital balances of all four partners.

Correct A. Goodwill - A: £12,000, B: £8,000, C: £4,000; Revaluation - A: £5,000, B: £3,333.33, C: £1,666.67; New capitals - A: £77,000, B: £51,333.33, C: £25,666.67, D: £30,000

B. Goodwill - A: £10,000, B: £8,000, C: £6,000; Revaluation - A: £5,000, B: £3,333.33, C: £1,666.67; New capitals - A: £75,000, B: £51,333.33, C: £27,666.67, D: £30,000

C. Goodwill - A: £12,000, B: £9,000, C: £3,000; Revaluation - A: £4,500, B: £3,000, C: £1,500; New capitals - A: £76,500, B: £52,500, C: £25,500, D: £30,000

D. Goodwill - A: £12,000, B: £8,000, C: £4,000; Revaluation - A: £6,000, B: £3,000, C: £2,000; New capitals - A: £78,000, B: £51,000, C: £26,000, D: £30,000

Correct Answer: A

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Question 19 View Details

XYZ Ltd purchased office supplies on credit for £2,500. Within the discount period it paid the amount and received a cash discount of 2 %. Record the journal entry for the payment.

A. Debit Creditors £2,500; Credit Cash £2,500; Credit Purchase Discounts £0

B. Debit Creditors £2,500; Credit Cash £2,475; Credit Purchase Discounts £25

Correct C. Debit Creditors £2,500; Credit Cash £2,450; Credit Purchase Discounts £50

D. Debit Creditors £2,500; Credit Cash £2,460; Credit Purchase Discounts £40

Correct Answer: C

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Question 20 View Details

The cash book of ABC Co shows a balance of £5,200. The bank statement balance is £5,500. Outstanding checks total £800 and deposits in transit amount to £300. The bank has charged a service fee of £20 which has not yet been recorded in the cash book. A cheque for £1,180 was mistakenly recorded in the cash book as £1,360 (an over‑statement of £180); the cheque has been presented and appears on the bank statement for the correct amount. Determine the corrected cash book balance after reconciliation.

A. £5,300

B. £5,180

Correct C. £5,000

D. £5,020

Correct Answer: C

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Question 21 View Details

Company X's unadjusted trial balance (excerpt) shows the following balances (all amounts in \(\text{₦}\)): Cash Dr \(15{,}000\); Bank Dr \(8{,}500\); Sundry Debtors Dr \(?\); Inventory Dr \(12{,}000\); Prepaid Rent Dr \(2{,}400\); Equipment Dr \(25{,}000\); Accumulated Depreciation - Equipment Cr \(5{,}000\); Accounts Payable Cr \(9{,}800\); Bank Loan Cr \(10{,}000\); Capital Cr \(30{,}000\); Sales Revenue Cr \(45{,}000\); Cost of Goods Sold Dr \(20{,}000\); Rent Expense Dr \(3{,}600\); Utilities Expense Dr \(1{,}200\). The total debits equal the total credits. During the year the following adjusting entries are posted: 1. Depreciation expense \(1{,}200\) Dr and Accumulated Depreciation \(1{,}200\) Cr. 2. Accrued expenses \(800\) Dr and Accounts Payable \(800\) Cr. 3. Recognise rent used: Rent Expense \(500\) Dr and Prepaid Rent \(500\) Cr. 4. Omitted expense of \(300\) recorded as Expense \(300\) Dr and Accounts Payable \(300\) Cr. 5. An error: Sales Revenue of \(600\) was mistakenly recorded on the debit side. To correct, a credit of \(600\) is made to cancel the debit and a further credit of \(600\) is made to record the proper revenue. After posting these entries, what should be the adjusted debit balance of Sundry Debtors so that the trial balance remains balanced?

A. 14,100

B. 12,900

Correct C. 13,900

D. 13,500

Correct Answer: C

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Question 22 View Details

According to fundamental accounting concepts, which concept is violated when a company records the full purchase price of a long‑term machine as an expense in the income statement in the year of acquisition?

A. Going concern concept

Correct B. Matching concept

C. Historical cost concept

D. Revenue recognition concept

Correct Answer: B

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Question 23 View Details

XYZ Ltd maintains a Purchases Ledger Control Account. The control account shows: Opening balance Cr \(25{,}000\); Purchases during the period Cr \(48{,}000\); Returns to suppliers Dr \(3{,}200\); Payments made Dr \(30{,}500\); Closing balance Cr \(39{,}300\). The subsidiary ledger of individual creditors lists the following opening balances and transactions: Opening balances (Cr): A \(8{,}000\), B \(6{,}500\), C \(5{,}000\), D \(4{,}200\), E \(1{,}300\). Purchases allocated during the period (Cr): A \(10{,}000\), B \(12{,}000\), C \(9{,}000\), D \(8{,}000\), E \(9{,}000\). Returns: only from B, amount \(3{,}200\). Payments made totalling \(30{,}500\) were paid as follows: A \(12{,}000\), D \(8{,}500\), E \(5{,}000\) and the remainder to Creditor C. What amount was paid to Creditor C during the period?

A. 5,200

B. 6,000

C. 4,800

Correct D. 5,000

Correct Answer: D

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Question 24 View Details

At 31 March, the cash book of ABC Ltd shows a balance of Dr \(45{,}800\). The bank statement for the same date shows a balance of Dr \(48{,}200\). The following items are identified: Deposits in transit: \(3{,}500\); Outstanding checks: \(4{,}200\); Bank service charges not yet recorded: \(120\); Bank interest earned not yet recorded: \(250\); A cheque for \(1{,}570\) was omitted from the cash book. After reconciling, what should be the corrected cash‑book balance?

A. 48,200

Correct B. 47,500

C. 46,500

D. 44,360

Correct Answer: B

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Question 25 View Details

Below is the opening trial balance of DEF Co. (all amounts in \(\text{₦}\)). Cash Dr \(20{,}000\); Bank Dr \(5{,}000\); Accounts Receivable Dr \(8{,}000\); Inventory Dr \(12{,}000\); Equipment Dr \(30{,}000\); Accumulated Depreciation - Equipment Cr \(6{,}000\); Accounts Payable Cr \(9{,}000\); Bank Loan Cr \(15{,}000\); Capital Cr \(45{,}000\); Sales Revenue Cr \(50{,}000\); Cost of Goods Sold Dr \(25{,}000\); Rent Expense Dr \(4{,}000\); Utilities Expense Dr \(1{,}200\); Advertising Expense Dr \(?\). The trial balance is balanced. During the period the following transactions are posted: 1. Purchased inventory on credit for \(6{,}000\). 2. Sold goods costing \(10{,}000\) for cash \(15{,}000\). 3. Paid rent cash \(2{,}000\). 4. Received cash from a debtor \(3{,}000\) deposited in the bank. 5. Paid advertising cash \(5{,}000\). What is the final balance of Advertising Expense after all postings?

A. 29,800

Correct B. 24,800

C. 19,800

D. 24,000

Correct Answer: B

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