Practice neco financial_accounting 2019 Past Questions

Question 1 View Details

Given the following trial balance extracts (amounts in naira): Cash Dr 45,000; Accounts Receivable Dr 30,000; Inventory Dr \(X\); Equipment Dr 80,000; Accumulated Depreciation Cr 20,000; Accounts Payable Cr 25,000; Capital Cr \(Y\); Drawings Dr 15,000; Sales Revenue Cr 120,000; Rent Expense Dr 10,000. The total of the debit side is 200,000 and the total of the credit side must also be 200,000. Determine the amounts of \(X\) (Inventory) and \(Y\) (Capital).

A. Inventory = 22,500; Capital = 32,500

B. Inventory = 25,000; Capital = 30,000

C. Inventory = 15,000; Capital = 40,000

Correct D. Inventory = 20,000; Capital = 35,000

Correct Answer: D

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Question 2 View Details

During the period a cash sale of \(\text{₦}6,500\) was recorded only as a debit to Cash, with no corresponding credit entry. All other entries are correct. As a result the trial balance shows total debits exceeding total credits by \(\text{₦}6,500\).\n(a) Identify the type of error.\n(b) State the effect of the error on the trial balance.\n(c) What amount should be transferred to the suspense account to restore balance?

A. Error type: Omission; Effect: Debits exceed credits by ₦6,500; Amount to transfer to suspense: ₦3,250

B. Error type: Commission; Effect: Debits exceed credits by ₦6,500; Amount to transfer to suspense: ₦6,500

C. Error type: Omission; Effect: Credits exceed debits by ₦6,500; Amount to transfer to suspense: ₦6,500

Correct D. Error type: Omission; Effect: Debits exceed credits by ₦6,500; Amount to transfer to suspense: ₦6,500

Correct Answer: D

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Question 3 View Details

A trader keeps a single‑entry cash book. The following information is available for the year:\n- Opening stock: \(\text{₦}50,000\).\n- Purchases on credit: \(\text{₦}120,000\).\n- Sales on credit: \(\text{₦}180,000\).\n- Cash receipts from customers: \(\text{₦}140,000\).\n- Cash payments to suppliers: \(\text{₦}100,000\).\n- Opening cash balance: \(\text{₦}20,000\).\n- Cash sales represent \(30\%\) of total sales.\n- Closing stock: \(\text{₦}70,000\).\n- Cash expenses (excluding purchases) paid during the year amount to \(\text{₦}30,000\).\nAssuming the cash‑book closing cash balance is correct, determine the trader's net profit for the year.

A. -10000

B. -15000

Correct C. -20000

D. -25000

Correct Answer: C

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Question 4 View Details

The Machinery account (debit side) had an opening balance of \(\text{₦}200,000\) on 1 January. During the year the following transactions occurred:\n1. Purchase of new machinery on 1 March costing \(\text{₦}80,000\), paid cash.\n2. The machinery is depreciated on a straight‑line basis over 5 years with no residual value.\n3. On 30 June the old machinery that formed part of the opening balance (cost \(\text{₦}120,000\)) was sold for \(\text{₦}50,000\) cash.\n4. Wages and other cash expenses of \(\text{₦}30,000\) were paid during the year.\nAssuming depreciation is charged to the Machinery account, determine the balance of the Machinery account as at 31 December.

Correct A. 118667

B. 120000

C. 115000

D. 124667

Correct Answer: A

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Question 5 View Details

A delivery van was purchased on 1 January for \(\text{₦}2,400,000\). The company uses the diminishing‑balance method at a rate of 25 % per annum. After three full years the van was sold on 1 January for \(\text{₦}1,200,000\).\n(a) Calculate the accumulated depreciation at the date of sale.\n(b) Determine the book value of the van immediately before the sale.\n(c) State the gain or loss on the sale.

Correct A. Accumulated depreciation = 1,387,500; Book value = 1,012,500; Gain = 187,500

B. Accumulated depreciation = 1,387,500; Book value = 1,012,500; Gain = 212,500

C. Accumulated depreciation = 1,171,200; Book value = 1,228,800; Loss = 28,800

D. Accumulated depreciation = 1,800,000; Book value = 600,000; Gain = 600,000

Correct Answer: A

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Question 6 View Details

During preparation of a trial balance, two errors were made: (i) a purchase of \(\text{₦}45,000\) was recorded as a credit instead of a debit, and (ii) a sales return of \(\text{₦}12,000\) was omitted from the sales ledger. After these errors the trial balance shows total debits of \(\text{₦}210,000\) and total credits of \(\text{₦}210,000\). Determine the amount that must be transferred to the suspense account to correct the trial balance.

A. 45000

B. 99000

C. 57000

Correct D. 114000

Correct Answer: D

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Question 7 View Details

The Machinery ledger shows an opening debit balance of \(\text{₦}80,000\). During the year the following transactions were recorded: purchases of machinery \(\text{₦}45,000\), sales of machinery \(\text{₦}30,000\), depreciation charged at 12% on the opening balance, and a revaluation surplus of \(\text{₦}5,000\) credited to the account. Determine the closing balance of the Machinery ledger and state whether it is a debit or credit balance.

A. 90400

Correct B. 80400

C. 79500

D. 84500

Correct Answer: B

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Question 8 View Details

A machine was purchased for \(\text{₦}500,000\) with an estimated salvage value of \(\text{₦}50,000\) and a useful life of 5 years. The company applies the double‑declining‑balance method but will switch to the straight‑line method in the year when the DDB depreciation would reduce the book value below the salvage value. Calculate the depreciation expense for the third year.

A. 90000

Correct B. 72000

C. 80000

D. 60000

Correct Answer: B

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Question 9 View Details

The following information is available for a trading concern:\n- Opening stock: \(\text{₦}30,000\)\n- Closing stock: \(\text{₦}20,000\)\n- Sales: \(\text{₦}250,000\)\n- Gross profit is 20% of sales.\n- The sum of purchases and an unknown expense recorded in the books is \(\text{₦}195,000\).\nDetermine the amount of the unknown expense.

A. 2500

B. 15000

C. 10000

Correct D. 5000

Correct Answer: D

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Question 10 View Details

The Cash ledger shows an opening debit balance of \(\text{₦}15,000\). During the year cash receipts total \(\text{₦}120,000\) and cash payments total \(\text{₦}130,000\). In addition, a bank overdraft of \(\text{₦}10,000\) is recorded as a credit entry in the Cash ledger. Determine the closing balance of the Cash ledger and indicate whether it is a debit or credit balance.

A. Credit 15000

Correct B. Credit 5000

C. Debit 5000

D. Debit 10000

Correct Answer: B

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Question 11 View Details

Given the trial balance below, the debit side shows Cash \( \text{₦}120,000 \), Accounts Receivable \( \text{₦}45,000 \), Inventory \( \text{₦}80,000 \), Equipment \( \text{₦}150,000 \), Salaries Expense \( \text{₦}30,000 \), Rent Expense \( \text{₦}20,000 \) and Drawings (amount unknown). The credit side shows Accumulated Depreciation - Equipment \( \text{₦}30,000 \), Accounts Payable \( \text{₦}70,000 \), Revenue \( \text{₦}200,000 \) and Capital (opening) \( \text{₦}200,000 \). The net profit for the period is \( \text{₦}25,000 \) and will be added to Capital after closing. What is the amount of Drawings that will balance the trial balance?

Correct A. 80000

B. 90000

C. 75000

D. 85000

Correct Answer: A

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Question 12 View Details

According to fundamental accounting concepts, which concept is violated when a business records the purchase of a delivery van for \( \text{₦}500,000 \) as Sales Revenue?

A. Matching Principle

B. Historical Cost Principle

C. Going Concern

Correct D. Revenue Recognition

Correct Answer: D

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Question 13 View Details

On 15 March, a company bought inventory costing \( \text{₦}150,000 \). It paid cash \( \text{₦}50,000 \) and the balance was purchased on credit. Record the journal entry, specifying the accounts and amounts to be debited and credited.

Correct A. Inventory \( \text{₦}150,000 \); Cash \( \text{₦}50,000 \); Accounts Payable \( \text{₦}100,000 \)

B. Inventory \( \text{₦}150,000 \); Cash \( \text{₦}50,000 \); Notes Payable \( \text{₦}100,000 \)

C. Inventory \( \text{₦}150,000 \); Cash \( \text{₦}100,000 \); Accounts Payable \( \text{₦}50,000 \)

D. Inventory \( \text{₦}150,000 \); Cash \( \text{₦}0 \); Accounts Payable \( \text{₦}150,000 \)

Correct Answer: A

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Question 14 View Details

The municipality's General Fund for the year reports the following:\n- Revenue measured and available: \( \text{₦}2,500,000 \)\n- Revenue measured but not yet available: \( \text{₦}300,000 \)\n- Capital outlays: \( \text{₦}1,400,000 \)\n- Operating expenses: \( \text{₦}900,000 \)\n- Unspent appropriation at year‑end: \( \text{₦}200,000 \)\nUnder the modified accrual basis, only revenue that is measurable and available is recognized. Determine (a) the total recognized revenue, and (b) the fund balance at year‑end and its classification (assume the unspent appropriation is classified as unassigned).

A. Recognized revenue \( \text{₦}2,500,000 \); Fund balance \( \text{₦}300,000 \) unassigned

B. Recognized revenue \( \text{₦}2,800,000 \); Fund balance \( \text{₦}200,000 \) unassigned

Correct C. Recognized revenue \( \text{₦}2,500,000 \); Fund balance \( \text{₦}200,000 \) unassigned

D. Recognized revenue \( \text{₦}2,500,000 \); Fund balance \( \text{₦}200,000 \) restricted

Correct Answer: C

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Question 15 View Details

A clerk mistakenly debited Supplies Expense \( \text{₦}5,000 \) instead of the asset account Supplies for the same amount. What correcting journal entry should be made to rectify the error?

A. Debit Supplies \\ ( \\text{₦}5,000 \\); Credit Cash \\ ( \\text{₦}5,000 \\)

Correct B. Debit Supplies \( \text{₦}5,000 \); Credit Supplies Expense \( \text{₦}5,000 \)

C. Debit Supplies Expense \\ ( \\text{₦}5,000 \\); Credit Supplies \\ ( \\text{₦}5,000 \\)

D. Debit Supplies \\ ( \\text{₦}5,000 \\); Credit Accounts Payable \\ ( \\text{₦}5,000 \\)

Correct Answer: B

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Question 16 View Details

During the month the following transactions were recorded: 1. Purchased goods on credit for ₦200,000 with terms \(3\%\) discount if paid within 30 days, and paid freight of ₦7,500 in cash. 2. Returned goods worth ₦15,000 to the supplier. 3. Paid cash for office expenses of ₦9,000. When initially posting these transactions in the books of original entry, which amounts are entered in the purchases journal and what is the total debit side of that journal for the month?

A. 192500

Correct B. 207500

C. 202500

D. 200000

Correct Answer: B

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Question 17 View Details

A company has three customers with outstanding balances at the beginning of the month: A owes ₦45,000, B owes ₦30,000 and C owes ₦25,000. During the month the following occurred: - Cash receipts of ₦20,000 were received from customer A. - Credit sales of ₦50,000 were made to a new customer D. - A bad‑debt write‑off of ₦5,000 was made against customer B. What should be the balance shown in the Sales Ledger Control Account at month‑end?

A. 115000

B. 100000

Correct C. 125000

D. 130000

Correct Answer: C

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Question 18 View Details

A business maintains a double‑column cash book (cash and bank). The opening balances are Cash ₦12,000 and Bank ₦30,000. During the month the following transactions were recorded in the cash column only: - Cash sales of ₦45,000, of which a cash discount of \(2\%\) was allowed. - Cash purchases paid in cash amounting to ₦18,000. - A transfer of ₦5,000 from cash to bank. What is the closing cash balance in the cash book at the end of the month?

Correct A. 33100

B. 39000

C. 38100

D. 34000

Correct Answer: A

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Question 19 View Details

The cash book shows a closing balance of ₦87,300. The bank statement shows a closing balance of ₦85,000. The following reconciling items are identified: - Deposits in transit: ₦7,500 - Outstanding checks: ₦4,200 - Bank service charge not yet recorded in the cash book: ₦300 - A customer's cheque of ₦1,200 was returned unpaid and not yet recorded. - The bank incorrectly credited the account with ₦500. What is the corrected cash book balance after incorporating the necessary adjustments?

A. 85300

B. 86600

C. 86100

Correct D. 86300

Correct Answer: D

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Question 20 View Details

Company X purchased office equipment for ₦120,000 cash. Record the journal entry using the double‑entry system.

A. Debit Office Equipment ₦100,000; Credit Cash ₦100,000

B. Debit Cash ₦120,000; Credit Office Equipment ₦120,000

C. Debit Office Equipment ₦120,000; Credit Accounts Payable ₦120,000

Correct D. Debit Office Equipment ₦120,000; Credit Cash ₦120,000

Correct Answer: D

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Question 21 View Details

Record the journal entry for the purchase of office equipment costing \(\text{₦}200,000\), of which \(\text{₦}150,000\) was paid in cash and the balance was bought on credit.

A. Office Equipment Dr ₦150,000\nCash Cr ₦150,000\nAccounts Payable Cr ₦0

B. Office Equipment Dr ₦200,000\nCash Dr ₦150,000\nAccounts Payable Cr ₦50,000

Correct C. Office Equipment Dr ₦200,000\nCash Cr ₦150,000\nAccounts Payable Cr ₦50,000

D. Office Equipment Dr ₦200,000\nCash Cr ₦100,000\nAccounts Payable Cr ₦100,000

Correct Answer: C

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Question 22 View Details

The trial balance of XYZ Ltd shows total debits of \(\text{₦}1,250,000\) and total credits of \(\text{₦}1,200,000\). On review, the accountant discovers that a purchase of office supplies costing \(\text{₦}30,000\) was mistakenly recorded as \(\text{₦}3,000\) in the Purchases account. Determine (a) the amount that should be transferred to or from the suspense account to balance the trial balance, and (b) the corrected total of the Purchases account.

A. a) ₦77,000 to be credited to suspense account; b) Corrected Purchases = ₦33,000

B. a) ₦77,000 to be debited to suspense account; b) Corrected Purchases = ₦30,000

C. a) ₦70,000 to be credited to suspense account; b) Corrected Purchases = ₦30,000

Correct D. a) ₦77,000 to be credited to suspense account; b) Corrected Purchases = ₦30,000

Correct Answer: D

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Question 23 View Details

The following information relates to ABC Manufacturing for the year ended 31 December 2022:\n\n- Opening Stock: \(\text{₦}50,000\)\n- Purchases: \(\text{₦}300,000\)\n- Closing Stock: \(\text{₦}80,000\)\n- Sales: \(\text{₦}500,000\)\n- Machinery cost: \(\text{₦}120,000\) (depreciated at 10% per annum)\n- Trade Receivables at year‑end: \(\text{₦}40,000\) (bad debts are 5% of receivables)\n- Prepaid rent of \(\text{₦}24,000\) for six months at year‑end (rent expense for the year is therefore \(\text{₦}12,000\))\n- Salaries expense: \(\text{₦}80,000\)\n- Electricity expense: \(\text{₦}20,000\)\n- Net profit before tax is to be taxed at 30%.\n- The company has 10,000 ordinary shares outstanding.\n\nCalculate (a) the net profit after tax for the year and (b) the earnings per share (EPS) in naira.

A. a) ₦70,000; b) ₦7.00 per share

Correct B. a) ₦72,800; b) ₦7.28 per share

C. a) ₦68,800; b) ₦6.88 per share

D. a) ₦81,200; b) ₦8.12 per share

Correct Answer: B

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Question 24 View Details

A piece of equipment was purchased for \(\text{₦}200,000\) with an estimated residual value of \(\text{₦}20,000\) and a useful life of 5 years. The company applied the straight‑line method for the first year and then switched to the double‑declining‑balance method for the remaining years. Calculate the depreciation expense to be recorded for the third year of use.

A. ₦35,500

B. ₦40,000

C. ₦30,250

Correct D. ₦37,786

Correct Answer: D

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Question 25 View Details

Partners A and B run a business with a profit‑sharing ratio of 3:2. Their original capital balances are A: \(\text{₦}150,000\) and B: \(\text{₦}100,000\). The partnership revalues its building upward by \(\text{₦}50,000\), which is credited to a revaluation reserve. Goodwill is valued at \(\text{₦}120,000\) and is to be shared between the existing partners in their profit‑sharing ratio. A new partner C is admitted, contributing \(\text{₦}80,000\) in cash for a 25 % share of the profits. After admission, the profit‑sharing arrangement becomes A:B:C = 45 % : 30 % : 25 %. During the year, the partnership earns a net profit of \(\text{₦}90,000\).\n\nCalculate the capital balances of A, B and C at the end of the year, after allocating goodwill, admitting C, and distributing the year's profit according to the new sharing ratios.

A. A: ₦270,000; B: ₦180,000; C: ₦100,000

B. A: ₦250,000; B: ₦175,000; C: ₦115,000

C. A: ₦262,500; B: ₦165,000; C: ₦112,500

Correct D. A: ₦262,500; B: ₦175,000; C: ₦102,500

Correct Answer: D

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