Practice neco financial_accounting 2018 Past Questions

Question 1 View Details

The totals of the sales journal, purchases journal and cash receipts journal for the month are ₦200,000, ₦120,000 and ₦150,000 respectively. The cash payments journal was recorded as being 5\% higher than the purchases journal total. The trial balance shows total debits and credits of ₦600,000. It is discovered that a cash purchase of amount \(x\) was omitted from the cash payments journal but correctly recorded in the purchases journal. Determine the value of \(x\) in naira.

Correct A. 4000

B. 6000

C. 5000

D. 3000

Correct Answer: A

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Question 2 View Details

Explain how the purchase of equipment on credit for ₦50,000 affects the fundamental accounting equation. State the change in assets, liabilities and owners' equity.

A. Assets remain unchanged; Liabilities increase by ₦50,000; Owners' equity increases by ₦50,000.

B. Assets increase by ₦50,000; Liabilities remain unchanged; Owners' equity decreases by ₦50,000.

C. Assets increase by ₦50,000; Liabilities decrease by ₦50,000; Owners' equity remains unchanged.

Correct D. Assets increase by ₦50,000; Liabilities increase by ₦50,000; Owners' equity remains unchanged.

Correct Answer: D

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Question 3 View Details

A cash sale of ₦30,000 was made during the month. The opening cash balance at the start of the month was ₦10,000. Record the journal entry for the sale and compute the closing cash balance at month‑end.

A. 30000

Correct B. 40000

C. 35000

D. 50000

Correct Answer: B

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Question 4 View Details

The trial balance of a sole trader shows the following figures (all amounts in naira): Sales ₦500,000; Opening Stock ₦80,000; Purchases ₦300,000; Closing Stock ₦70,000; Operating Expenses ₦50,000; Depreciation expense ₦20,000. However, the depreciation expense was omitted from the trial balance. Determine the net profit for the year.

A. 130000

B. 150000

C. 120000

Correct D. 140000

Correct Answer: D

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Question 5 View Details

The purchases journal for the month was recorded as ₦150,000. It was later found that a purchase of ₦20,000 had been entered twice. What is the correct total of the purchases journal after correcting the error?

A. 170000

B. 120000

Correct C. 130000

D. 150000

Correct Answer: C

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Question 6 View Details

A government department uses modified accrual accounting. The opening cash fund balance at the start of the period is \(\text{₦}150,000\). During the period the department received cash receipts of \(\text{₦}85,000\) and a tax receivable of \(\text{₦}30,000\) (non‑cash). Cash payments amounted to \(\text{₦}70,000\) and accrued salaries of \(\text{₦}20,000\) were recognized (non‑cash). At period end an additional accrued salary expense of \(\text{₦}5,000\) is recorded and a transfer of \(\text{₦}10,000\) is made to a capital project fund. What is the closing cash fund balance at the end of the period?

Correct A. 155000

B. 185000

C. 150000

D. 165000

Correct Answer: A

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Question 7 View Details

According to the accounting equation \(\text{Assets} = \text{Liabilities} + \text{Owner\'s\ Equity}\), if assets increase by \(\text{₦}45,000\) and liabilities decrease by \(\text{₦}12,000\) during a period, what is the change in owner's equity?

Correct A. 57000

B. 33000

C. 12000

D. 45000

Correct Answer: A

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Question 8 View Details

The cash book shows a balance of \(\text{₦}120,500\). The bank statement balance is \(\text{₦}118,200\). Outstanding checks of \(\text{₦}600\) and \(\text{₦}350\) have not been cleared. Deposits in transit total \(\text{₦}2,800\). The bank charged a service fee of \(\text{₦}150\) which was not recorded in the cash book. A cheque was recorded in the cash book for \(\text{₦}2,500\) but the actual amount was \(\text{₦}2,800\). Determine the adjusted cash book balance after all reconciling items are taken into account.

A. 119950

B. 120800

C. 120350

Correct D. 120050

Correct Answer: D

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Question 9 View Details

After posting all journal entries, the trial balance shows total debits of \(\text{₦}300,000\) and total credits of \(\text{₦}305,000\). It is discovered that a purchase of inventory on credit was omitted, but the VAT payable of 5 % on that purchase was correctly recorded as a credit of \(\text{₦}5,000\). What is the amount of the omitted purchase (excluding VAT)?

A. 120000

Correct B. 100000

C. 95000

D. 105000

Correct Answer: B

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Question 10 View Details

A company pays \(\text{₦}24,000\) on 1 January for a 12‑month insurance policy. By 31 March, how much of the policy should be recognised as insurance expense and what is the remaining balance of prepaid insurance?

A. Expense: 6000, Prepaid: 15000

B. Expense: 5000, Prepaid: 19000

Correct C. Expense: 6000, Prepaid: 18000

D. Expense: 8000, Prepaid: 16000

Correct Answer: C

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Question 11 View Details

The Machinery ledger shows an opening balance of \(150,000\) (debit). During the year a machine costing \(45,000\) was purchased on 1 May. Depreciation is charged at \(10\%\) per annum on cost, calculated for the full year on existing assets and for the portion of the year owned on new assets. On 30 June a machine with original cost \(30,000\) and accumulated depreciation \(18,000\) was sold for \(12,000\) cash. The opening accumulated depreciation balance was \(12,000\). Compute the closing balance of the Machinery (cost) account and the Accumulated Depreciation account at year‑end.

A. Machinery: 165,000; Accumulated Depreciation: 15,000

B. Machinery: 180,000; Accumulated Depreciation: 12,000

Correct C. Machinery: 165,000; Accumulated Depreciation: 12,000

D. Machinery: 165,000; Accumulated Depreciation: 13,500

Correct Answer: C

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Question 12 View Details

The trial balance of XYZ Ltd includes the following items (all figures in Naira): Sales \(500,000\), Purchases \(250,000\), Purchase Returns \(20,000\), Carriage Inwards \(5,000\), Opening Stock \(80,000\), Closing Stock \(70,000\), Rent \(30,000\), Salaries \(40,000\), Other Expenses \(8,000\), Depreciation - Buildings \(12,000\), Bad Debts Expense \(6,000\), Trade Discount Allowed \(4,000\), Trade Discount Received \(3,000\), Interest Received \(2,000\), Bank Charges \(1,000\). Overheads (Rent, Salaries and Other Expenses) are to be allocated between manufacturing and administrative functions in the ratio 3:2. Prepare the income statement and state the net profit for the year.

Correct A. 159,000

B. 147,000

C. 165,000

D. 152,000

Correct Answer: A

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Question 13 View Details

The trial balance (Naira) shows: Cash \(45,000\) (debit), Bank \(30,000\) (debit), Trade Receivables \(25,000\) (debit), Inventory \(20,000\) (debit), Equipment \(15,000\) (debit), Rent Expense \(12,000\) (debit); Capital \(70,000\) (credit), Loans Payable \(20,000\) (credit), Sales \(50,000\) (credit), Interest Income \(2,000\) (credit), Suspense Account \(5,000\) (credit). The cash balance contains a transposition error and the purchases entry of \(35,000\) has been omitted. Determine the correct cash balance, the missing Purchases amount, and the new total of each side of the trial balance after correction.

A. Cash = 53,000; Purchases = 35,000; Adjusted trial balance total = 191,000

Correct B. Cash = 54,000; Purchases = 35,000; Adjusted trial balance total = 191,000

C. Cash = 54,000; Purchases = 30,000; Adjusted trial balance total = 186,000

D. Cash = 54,000; Purchases = 35,000; Adjusted trial balance total = 200,000

Correct Answer: B

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Question 14 View Details

During the year the following credit transactions were recorded: total sales before discounts \(200,000\), trade discount allowed \(5\%\) on all sales, sales returns \(8,000\), cash received from customers \(150,000\). The purchases before discounts were \(120,000\), trade discount received \(2\%\) on purchases, purchase returns \(5,000\), cash paid to suppliers \(90,000\). Compute the closing balances of the Trade Receivables ledger and the Trade Payables ledger at year‑end.

Correct A. Trade Receivables = 32,000; Trade Payables = 22,600

B. Trade Receivables = 42,000; Trade Payables = 22,600

C. Trade Receivables = 32,000; Trade Payables = 27,400

D. Trade Receivables = 40,000; Trade Payables = 25,000

Correct Answer: A

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Question 15 View Details

The cash book shows a balance of \(85,000\). The bank statement balance is \(78,500\). The following items are outstanding: outstanding checks \(4,200\), deposits in transit \(3,600\). The bank has charged service fees of \(250\) and credited interest of \(120\) which are not yet recorded in the cash book. A receipt of \(1,500\) was mistakenly entered as \(1,200\) in the cash book. The bank also omitted a credit of \(7,270\) on the statement. Prepare the bank reconciliation and state the adjusted cash book balance.

A. 85,470

B. 85,000

Correct C. 85,170

D. 84,920

Correct Answer: C

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Question 16 View Details

A business purchased office supplies on credit for \(45,000\) naira. Prepare the journal entry recording this transaction.

A. Debit Office Supplies \(45,000\); Credit Cash \(45,000\)

Correct B. Debit Office Supplies \(45,000\); Credit Accounts Payable \(45,000\)

C. Debit Accounts Payable \(45,000\); Credit Office Supplies \(45,000\)

D. Debit Office Supplies \(40,000\); Credit Accounts Payable \(40,000\)

Correct Answer: B

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Question 17 View Details

The cash book of XYZ Ltd shows an opening cash balance of \(120,000\) naira. During the month the following transactions were recorded: Receipts: cash sales \(85,000\), loan received \(30,000\). Payments: rent \(25,000\), utilities \(12,000\), purchase of inventory \(40,000\). The cash book records a closing balance of \(58,000\) naira. Later it is discovered that a cash sale of \(15,000\) naira was omitted from the receipts and a payment of \(5,000\) naira for advertising was entered twice. What is the corrected closing cash balance?

A. 73,000

B. 68,000

C. 88,000

Correct D. 78,000

Correct Answer: D

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Question 18 View Details

Partners A and B share profits in the ratio 3:2. Their capital balances are A \(150,000\) naira and B \(100,000\) naira. A new partner C is admitted, contributing \(80,000\) naira for a 25% profit share. At the same time the partnership revalues a building whose book value is \(200,000\) naira and market value is \(260,000\) naira. The revaluation surplus is to be shared between the existing partners in their profit‑sharing ratio. No goodwill is recorded. Determine: 1. The amount of revaluation surplus credited to A and to B. 2. The new capital balances of A, B and C after the admission.

A. A receives 36,000; B receives 24,000; New capitals - A: 180,000; B: 120,000; C: 80,000

B. A receives 36,000; B receives 24,000; New capitals - A: 186,000; B: 124,000; C: 100,000

Correct C. A receives 36,000; B receives 24,000; New capitals - A: 186,000; B: 124,000; C: 80,000

D. A receives 24,000; B receives 36,000; New capitals - A: 174,000; B: 136,000; C: 80,000

Correct Answer: C

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Question 19 View Details

A machine was purchased on 1 January 2020 for \(500,000\) naira. It has a residual value of \(50,000\) naira and a useful life of 5 years. The company depreciates the machine using the straight‑line method for the first two years and then switches to the reducing‑balance method at a rate of 40 % per annum for the remaining years. Calculate: a) The depreciation expense for the year ended 31 December 2023. b) The carrying amount of the machine on that date.

A. Depreciation expense for 2023: 68,000 naira; Carrying amount: 122,400 naira

B. Depreciation expense for 2023: 84,000 naira; Carrying amount: 106,000 naira

Correct C. Depreciation expense for 2023: 76,800 naira; Carrying amount: 115,200 naira

D. Depreciation expense for 2023: 70,000 naira; Carrying amount: 120,000 naira

Correct Answer: C

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Question 20 View Details

Partners X, Y and Z share profits and losses in the ratio 2:3:5. Their capital balances at dissolution are X \(120,000\) naira, Y \(180,000\) naira and Z \(300,000\) naira. The partnership has a loan payable of \(150,000\) naira and an outstanding rent receivable of \(20,000\) naira. The partnership also owns a building with a book value of \(500,000\) naira and a market value of \(650,000\) naira, which is sold at market value. Goodwill of \(100,000\) naira is to be recognized and shared among the partners in their profit‑sharing ratio. After settling the loan and collecting the rent receivable, the remaining cash is distributed to the partners in the profit‑sharing ratio. Determine the amount each partner receives on dissolution.

A. X receives 124,000 naira; Y receives 186,000 naira; Z receives 310,000 naira

B. X receives 154,000 naira; Y receives 231,000 naira; Z receives 385,000 naira

Correct C. X receives 104,000 naira; Y receives 156,000 naira; Z receives 260,000 naira

D. X receives 138,000 naira; Y receives 207,000 naira; Z receives 275,000 naira

Correct Answer: C

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Question 21 View Details

During the preparation of the trial balance, the following balances (in naira) were recorded:\n\nDebit side: Cash \(200,000\), Accounts Receivable \(120,000\), Inventory \(150,000\), Prepaid Insurance \(30,000\), Sundry Expenses \(?\)\n\nCredit side: Accounts Payable \(130,000\), Bank Loan \(250,000\), Capital \(300,000\), Sales Revenue \(?\)\n\nAn adjusting entry for depreciation of \(15,000\) was made, debiting Depreciation Expense and crediting Accumulated Depreciation. After this entry the trial balance balances with total debits and credits of \(720,000\) each.\n\nWhat is the amount of Sundry Expenses?

A. 225,000

Correct B. 205,000

C. 220,000

D. 190,000

Correct Answer: B

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Question 22 View Details

On 5 January the business paid a supplier \(\text{₦}40,000\). The clerk mistakenly recorded only a debit to Cash for \(\text{₦}40,000\) and omitted the corresponding credit to Accounts Payable. On 12 January a credit sale of \(\text{₦}15,000\) was omitted entirely. At the end of the period the trial balance shows total debits exceeding total credits by \(\text{₦}40,000\), and a suspense account with a debit balance of \(\text{₦}40,000\) is created.\n\nWhat amount should be transferred from the suspense account to correct the trial balance?

A. 15,000

B. 80,000

Correct C. 40,000

D. 0

Correct Answer: C

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Question 23 View Details

Widget Ltd uses process costing. The following data are for the quarter:\n\n**Department A** (materials added at the start)\n- Opening WIP: 5,000 units, 40 % complete for conversion; cost = \(\text{₦}30,000\) materials + \(\text{₦}20,000\) conversion\n- Units started: 25,000\n- Units transferred to Dept B: 20,000\n- Closing WIP: 10,000 units, 50 % complete for conversion\n- Materials added during period: \(\text{₦}150,000\)\n- Conversion added during period: \(\text{₦}120,000\)\n- Machine hours: 4,000 hrs; overhead applied at \(\text{₦}5\) per hour\n\n**Department B** (materials added at the start)\n- Opening WIP: 2,000 units, 30 % complete for conversion; cost = \(\text{₦}12,000\) materials + \(\text{₦}8,000\) conversion\n- Units received from Dept A: 20,000\n- Units started: 15,000\n- Units completed and transferred to finished goods: 30,000\n- Closing WIP: 2,000 units, 60 % complete for conversion\n- Materials added during period: \(\text{₦}90,000\)\n- Conversion added during period: \(\text{₦}110,000\)\n- Machine hours: 5,000 hrs; overhead applied at \(\text{₦}6\) per hour\n\nCalculate the total cost of units transferred to finished goods after Department B, including the cost of units transferred in from Department A.

A. 485,033

B. 495,933

C. 475,933

Correct D. 485,933

Correct Answer: D

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Question 24 View Details

The following trial balance (in naira) was prepared after posting the adjusting entry for depreciation (Depreciation Expense \(12,000\) debited and Accumulated Depreciation \(12,000\) credited):\n\nDebit: Cash \(150,000\); Accounts Receivable \(70,000\); Equipment \(80,000\); Sundry Expenses \(30,000\); Rent Expense \(8,000\)\n\nCredit: Accounts Payable \(70,000\); Bank Loan \(130,000\); Capital \(100,000\); Accumulated Depreciation \(12,000\); Service Revenue \(?\)\n\nThe trial balance shows a debit excess of \(8,000\), which is placed in a suspense account.\n\nWhat is the amount of Service Revenue?

A. 38,000

B. 22,000

C. 40,000

Correct D. 30,000

Correct Answer: D

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Question 25 View Details

A municipal council prepares a quarterly cash budget for its Health Department.\n\n**Budgeted receipts** (₦): Taxes 5,000,000; Grants 2,000,000; Borrowings 1,500,000 - total 8,500,000.\n**Budgeted payments** (₦): Salaries 3,200,000; Supplies 1,800,000; Capital projects 2,500,000; Interest 200,000 - total 7,700,000. (Budgeted surplus 800,000)\n\n**Actual receipts** (₦): Taxes 4,800,000; Grants 2,200,000; Borrowings 1,400,000 - total 8,400,000.\n**Actual payments** (₦): Salaries 3,250,000; Supplies 1,750,000; Capital projects 2,600,000; Interest 210,000 - total 7,810,000.\n\nAt quarter‑end there is an unspent appropriation of \(\text{₦}150,000\) from the previous quarter that must be transferred to the "Unspent Appropriation Fund". A supplementary grant of \(\text{₦}300,000\) has been received and will be recorded as a liability until spent.\n\nDetermine (a) the cash surplus (or deficit) for the quarter after accounting for the actual receipts and payments, and (b) the amount that should be transferred to the Unspent Appropriation Fund at quarter end.

A. Cash surplus = 590,000; Transfer to Unspent Appropriation Fund = 150,000

Correct B. Cash surplus = 440,000; Transfer to Unspent Appropriation Fund = 150,000

C. Cash surplus = 590,000; Transfer to Unspent Appropriation Fund = 300,000

D. Cash surplus = 440,000; Transfer to Unspent Appropriation Fund = 300,000

Correct Answer: B

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