Practice neco financial_accounting 2020 Past Questions

Question 1 View Details

During the fiscal year, a government department had the following opening balances: cash in hand N100,000, receivables N50,000, accrued expenses N30,000, and a fund transfer of N20,000 recorded but not yet executed. During the year the department incurred expenses of N80,000, received cash receipts of N120,000, discovered an unrecorded accrued salary liability of N15,000 at year‑end, and needed to reverse an earlier over‑statement of revenue of N10,000 that had already been received in cash. What is the corrected closing cash balance at the end of the year?

A. 130000

Correct B. 145000

C. 150000

D. 135000

Correct Answer: B

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Question 2 View Details

Opening balances are: Sales (credit) N200,000; Purchases (debit) N120,000; Cash (debit) N50,000. The following transactions were recorded in the journal but not yet posted: (i) cash sales of N30,000, (ii) credit purchases of N20,000, (iii) cash paid for purchases N15,000. After posting, it is discovered that a purchase of N5,000 was mistakenly recorded as a sale. Determine the final balance of the Cash account.

A. 55000

Correct B. 60000

C. 50000

D. 65000

Correct Answer: B

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Question 3 View Details

The trial balance shows the following balances (in Naira): Dr - Purchases N25,000, Dr - Salaries N15,000, Dr - Rent N20,000; Cr - Cash N30,000, Cr - Suspense N30,000. It is later discovered that the Purchases entry was posted on the wrong side (it should be a credit) and a cash receipt of N5,000 was omitted. What total amount should be transferred from the Suspense Account to correct the trial balance, and what are the corrected balances of Purchases and Cash?

A. 25,000; Purchases credit 25,000; Cash credit 30,000

B. 35,000; Purchases credit 25,000; Cash credit 40,000

C. 30,000; Purchases credit 20,000; Cash credit 35,000

Correct D. 30,000; Purchases credit 25,000; Cash credit 35,000

Correct Answer: D

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Question 4 View Details

Given the data for the year (all amounts in Naira): Opening raw materials stock N120,000; Purchases of raw materials N350,000; Closing raw materials stock N100,000; 10 % of purchases were defective and written off; Direct labor N200,000; Manufacturing overhead applied at 150 % of direct labor; Opening work‑in‑progress N80,000; Closing work‑in‑progress N70,000; Opening finished goods N90,000; Closing finished goods N110,000; Sales revenue N1,200,000; Selling and distribution expenses N150,000; Administrative expenses N130,000. Compute the gross profit for the year.

Correct A. 375000

B. 340000

C. 355000

D. 675000

Correct Answer: A

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Question 5 View Details

The following transactions were recorded in the journal for March (amounts in Naira): 1. Purchased office supplies on credit N12,000. 2. Received cash from a client for services rendered N25,000. 3. Paid cash for rent N8,000. 4. Sold equipment for cash N15,000 (original cost N20,000, accumulated depreciation N5,000). 5. Borrowed from bank, cash N30,000, note payable N30,000. The cash book (single‑entry) mistakenly recorded the equipment sale receipt as N20,000 instead of N15,000. Assuming the opening cash balance was zero, determine the corrected cash balance at the end of March and the amount by which the cash book must be adjusted.

A. 57,000; adjust cash book down by 5,000

B. 62,000; adjust cash book up by 5,000

C. 62,000; adjust cash book down by 10,000

Correct D. 62,000; adjust cash book down by 5,000

Correct Answer: D

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Question 6 View Details

If the purchases journal for June shows total debits of \(1,200,000\) naira and total credits of \(1,200,000\) naira. The recorded entries are: (i) Purchase of inventory on credit \(700,000\) naira (debit inventory, credit accounts payable); (ii) Purchase returns \(50,000\) naira (debit accounts payable, credit inventory); (iii) Discount received \(150,000\) naira (credit discount received); (iv) Cash sales of \(300,000\) naira (credit sales). The cash amount received from customers for the cash sales is omitted as a debit entry. Determine the cash received amount.

A. 450000

B. 550000

C. 600000

Correct D. 500000

Correct Answer: D

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Question 7 View Details

A government department budgeted cash receipts of \(12,000,000\) naira and cash payments of \(9,500,000\) naira for the year. At year‑end, actual cash receipts were 10 % higher than budgeted and actual cash payments were 8 % lower than budgeted. The department also recorded a non‑cash depreciation expense of \(1,200,000\) naira. Determine the variance in the department's ending cash balance compared with the budgeted ending cash balance, stating whether it is a surplus or deficit.

A. 2060000 surplus

Correct B. 1960000 surplus

C. 1960000 deficit

D. 1860000 surplus

Correct Answer: B

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Question 8 View Details

The sales ledger control account opened with a credit balance of \(250,000\) naira. During the year, credit sales amounted to \(1,800,000\) naira and cash received from customers was \(1,200,000\) naira. At year‑end the control account shows a debit balance of \(150,000\) naira. Determine the amount of sales returns recorded during the year.

A. 800000

B. 1000000

Correct C. 700000

D. 500000

Correct Answer: C

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Question 9 View Details

For the year ended 31 December 2020, a sole trader's records show: opening stock \(120,000\) naira, purchases \(1,200,000\) naira, sales \(1,500,000\) naira, and a gross profit rate of 30 % of sales. Operating expenses (excluding depreciation) total \(180,000\) naira, depreciation expense is \(40,000\) naira, and net profit for the year is \(84,000\) naira. Using the gross‑profit method, determine the value of the closing stock.

A. 490000

Correct B. 270000

C. 300000

D. 180000

Correct Answer: B

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Question 10 View Details

A company has the following information for the year ended 31 December 2020: share capital of \(5,000,000\) naira representing 100,000 ordinary shares of \(50\) naira each; opening retained earnings \(2,400,000\) naira; net profit for the year \(1,200,000\) naira; dividends paid \(600,000\) naira; a revaluation surplus on property of \(300,000\) naira; property, plant and equipment costing \(9,000,000\) naira with accumulated depreciation of \(2,000,000\) naira; depreciation expense for the year \(300,000\) naira; inventory at year‑end \(800,000\) naira; trade receivables \(1,200,000\) naira; trade payables \(900,000\) naira; a non‑current bank loan of \(1,500,000\) naira; current tax payable \(150,000\) naira; and a cash balance of \(2,150,000\) naira. Prepare the statement of financial position as at 31 December 2020 and compute the earnings per share (EPS).

A. 10

Correct B. 12

C. 14

D. 8

Correct Answer: B

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Question 11 View Details

The Purchases Returns Control Account shows an opening debit balance of ₦120,000. During the year total purchases recorded in the Purchases Ledger were ₦850,000. Returns to suppliers recorded in the Returns Ledger amounted to ₦45,000. Cash payments to suppliers (including discounts taken) totalled ₦780,000. The closing balance of the control account is a credit of ₦5,000. Determine the amount of discount taken on payments.

A. 155000

Correct B. 150000

C. 130000

D. 145000

Correct Answer: B

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Question 12 View Details

A business purchased equipment for ₦500,000 cash on 1\,January. The equipment is depreciated using the straight‑line method over 5\,years with no residual value. What is the carrying amount of the equipment at the end of the first year?

A. 450000

B. 500000

C. 350000

Correct D. 400000

Correct Answer: D

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Question 13 View Details

The cash book balance as at 30\,June is ₦250,000. The bank statement balance for the same date shows ₦265,000. Deposits in transit amount to ₦18,000 and outstanding checks total ₦30,000. The bank charged a service fee of ₦2,500 that has not yet been recorded in the cash book. Additionally, the bank incorrectly debited a customer's cheque of ₦5,000 (bank error). The bank also collected a note receivable on behalf of the company for ₦10,500, which is not yet recorded in the cash book. Determine the corrected cash book balance after reconciliation.

A. 263000

B. 271500

C. 268000

Correct D. 268500

Correct Answer: D

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Question 14 View Details

A machine was purchased on 1\,January\,2020 for ₦800,000. It has a residual value of ₦80,000 and a useful life of 8\,years. The company uses the reducing‑balance method at a rate of 25\% per annum. The machine was sold on 1\,July\,2023 for ₦250,000. Determine (i) the accumulated depreciation up to the date of sale and (ii) the profit or loss on disposal. Express amounts in naira, rounded to the nearest naira.

A. Accumulated depreciation: 504688; Profit on disposal: 20000

Correct B. Accumulated depreciation: 504688; Loss on disposal: 45313

C. Accumulated depreciation: 492000; Loss on disposal: 58000

D. Accumulated depreciation: 530000; Loss on disposal: 30000

Correct Answer: B

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Question 15 View Details

On 15\,March, the business purchased office supplies on credit for ₦45,000. Record the journal entry.

A. Debit Office Supplies 45,000; Credit Cash 45,000

B. Debit Office Supplies 40,000; Credit Accounts Payable 40,000

Correct C. Debit Office Supplies 45,000; Credit Accounts Payable 45,000

D. Debit Accounts Payable 45,000; Credit Office Supplies 45,000

Correct Answer: C

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Question 16 View Details

A business starts the month with cash \(\text{₦}500,000\), equipment \(\text{₦}0\), total assets \(\text{₦}500,000\), liabilities \(\text{₦}200,000\) and owner's equity \(\text{₦}300,000\). During the month it purchases equipment for cash costing \(\text{₦}150,000\). State the new balances of cash, equipment, total assets, liabilities and owner's equity after this transaction.

A. Cash: ₦350,000; Equipment: ₦150,000; Total assets: ₦500,000; Liabilities: ₦350,000; Owner's equity: ₦150,000

B. Cash: ₦500,000; Equipment: ₦150,000; Total assets: ₦650,000; Liabilities: ₦200,000; Owner's equity: ₦300,000

C. Cash: ₦350,000; Equipment: ₦150,000; Total assets: ₦650,000; Liabilities: ₦200,000; Owner's equity: ₦300,000

Correct D. Cash: ₦350,000; Equipment: ₦150,000; Total assets: ₦500,000; Liabilities: ₦200,000; Owner's equity: ₦300,000

Correct Answer: D

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Question 17 View Details

The cash receipts journal shows a total receipt of \(\text{₦}42,500\) while the sales ledger records sales of \(\text{₦}45,000\) for the same period. Consequently the trial balance has a \(\text{₦}2,500\) debit‑side discrepancy. Assuming the error is one of the following - a transposition error, an error of commission, an error of principle, or an omission - identify the most likely type of error and prepare the correcting journal entry required to clear the suspense account.

A. Error of principle; correcting entry - Debit Sales ₦2,500, Credit Cash ₦2,500

B. Error of commission; correcting entry - Debit Cash ₦2,500, Credit Sales ₦2,500

C. Error of principle; correcting entry - Debit Cash ₦2,000, Credit Sales ₦2,000

Correct D. Error of principle; correcting entry - Debit Cash ₦2,500, Credit Sales ₦2,500

Correct Answer: D

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Question 18 View Details

During the first week of the month the owner of a sole‑proprietorship injects \(\text{₦}120,000\) of cash into the business. Prepare the journal entry for this transaction and state the effect on the accounting equation.

A. Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦100,000. Assets increase by ₦120,000 and equity increases by ₦100,000; liabilities unchanged.

B. Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦120,000. Assets increase by ₦120,000 and equity unchanged; liabilities unchanged.

Correct C. Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦120,000. Assets increase by ₦120,000 and equity increases by ₦120,000; liabilities unchanged.

D. Journal entry - Debit Owner's Capital ₦120,000; Credit Cash ₦120,000. Assets decrease by ₦120,000 and equity decreases by ₦120,000; liabilities unchanged.

Correct Answer: C

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Question 19 View Details

Four transactions occurred in June for ABC Ltd.:\n1. Purchased inventory on credit for \(\text{₦}250,000\).\n2. Sold goods for cash amounting to \(\text{₦}180,000\).\n3. Paid rent cash of \(\text{₦}20,000\).\n4. Received a bank loan in cash of \(\text{₦}100,000\).\nIdentify the appropriate book of original entry for each transaction (Purchases Journal, Sales Journal, Cash Payments Journal, Cash Receipts Journal) and compute the total amount that will be posted to the Purchases Journal.

A. Purchases Journal: transaction 1; Sales Journal: transaction 2; Cash Payments Journal: transaction 4; Cash Receipts Journal: transaction 3. Total posted to Purchases Journal = ₦250,000

Correct B. Purchases Journal: transaction 1; Sales Journal: transaction 2; Cash Payments Journal: transaction 3; Cash Receipts Journal: transaction 4. Total posted to Purchases Journal = ₦250,000

C. Purchases Journal: transaction 2; Sales Journal: transaction 1; Cash Payments Journal: transaction 3; Cash Receipts Journal: transaction 4. Total posted to Purchases Journal = ₦180,000

D. Purchases Journal: transaction 1; Sales Journal: transaction 2; Cash Payments Journal: transaction 3; Cash Receipts Journal: transaction 4. Total posted to Purchases Journal = ₦100,000

Correct Answer: B

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Question 20 View Details

The unadjusted trial balance of XYZ Ltd. as at 31 December is shown below (all figures in \(\text{₦}\)):\n\nCash Dr 80,000\nAccounts Receivable Dr 70,000\nInventory Dr 120,000\nEquipment Dr 150,000\nSalaries Expense Dr 110,000\nRent Expense Dr 40,000\nDrawings Dr 20,000\nAccumulated Depreciation - Equipment Cr 30,000\nAccounts Payable Cr 60,000\nCapital Cr 250,000\nSales Cr 500,000\n\nThe following adjusting entries are required:\n1. Depreciation expense on equipment \(\text{₦}20,000\).\n2. Accrued salaries expense \(\text{₦}15,000\).\nPrepare the adjusted trial balance and state the net profit for the period.

A. Adjusted trial balance balances at ₦875,000 on each side; Net profit = ₦330,000

B. Adjusted trial balance balances at ₦860,000 on each side; Net profit = ₦300,000

C. Adjusted trial balance balances at ₦890,000 on each side; Net profit = ₦315,000

Correct D. Adjusted trial balance balances at ₦875,000 on each side; Net profit = ₦315,000

Correct Answer: D

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Question 21 View Details

During the month the cash book shows an opening balance of ₦12,000. Receipts recorded are cash sales of ₦45,000, a loan of ₦10,000 and a customer payment of ₦8,000. Payments recorded are rent of ₦15,000, salaries of ₦20,000, purchase of inventory of ₦12,000 and a bank service charge of ₦500 (which appears only on the bank statement). The cash‑book balance at month end is recorded as ₦27,500. The bank statement shows a balance of ₦30,200. Outstanding checks amount to ₦3,200 and deposits in transit amount to ₦2,500. A cheque received from a customer for ₦4,000 was later dishonoured and appears as a deduction on the bank statement but was recorded in the cash book as a receipt. Assuming all other entries are correct, what amount of cash receipt was omitted from the cash book?

Correct A. ₦7,400

B. ₦6,400

C. ₦8,400

D. ₦7,000

Correct Answer: A

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Question 22 View Details

Partners A and B start the year with capital of ₦120,000 and ₦80,000 respectively. Their profit‑sharing ratio at the beginning of the year is 3:2. On 1 July A withdraws ₦20,000 and B withdraws ₦10,000 as drawings. Also on 1 July they agree to change the profit‑sharing ratio to 4:3 for the remainder of the year. Interest on capital is charged at 10\% per annum and interest on drawings at 6\% per annum (simple). A receives a salary of ₦5,000 per month for the whole year. The profit before any adjustments for the year is ₦180,000. Determine the final amount of profit allocated to A and to B.

Correct A. A: ₦57,971.43, B: ₦41,128.57

B. A: ₦55,000.00, B: ₦44,000.00

C. A: ₦58,500.00, B: ₦40,600.00

D. A: ₦60,000.00, B: ₦39,000.00

Correct Answer: A

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Question 23 View Details

The Sales Ledger Control Account has an opening debit balance of ₦150,000. During the year the following transactions occurred: credit sales of ₦500,000; cash receipts from debtors of ₦420,000; sales returns of ₦30,000; and a write‑off of uncollectible debts amounting to ₦5,000. At year‑end a provision for doubtful debts equal to 2\% of the closing receivables is created. Determine the closing balance of the Sales Ledger Control Account.

A. ₦192,000 (debit)

Correct B. ₦191,100 (debit)

C. ₦195,000 (debit)

D. ₦191,100 (credit)

Correct Answer: B

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Question 24 View Details

The Purchase Ledger Control Account shows an opening credit balance of ₦80,000. During the year the following occurred: credit purchases of ₦300,000; cash payments to suppliers of ₦250,000; purchase returns of ₦20,000; and cash discounts received amounting to 2\% on cash payments that were eligible for discount. The total cash payments eligible for discount were ₦150,000. Determine the closing balance of the Purchase Ledger Control Account.

Correct A. ₦113,000 (credit)

B. ₦110,000 (credit)

C. ₦115,000 (credit)

D. ₦107,000 (credit)

Correct Answer: A

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Question 25 View Details

On 1 March a business purchased equipment with a list price of ₦250,000. The supplier gave a trade discount of 5\% on the list price. The business paid a cash down‑payment of ₦100,000 and agreed to pay the balance on credit 30 days later. Record the journal entries for the purchase and for the down‑payment.

A. Journal Entry 1: Debit Equipment ₦225,000; Credit Accounts Payable ₦225,000.\nJournal Entry 2: Debit Accounts Payable ₦100,000; Credit Cash ₦100,000.

B. Journal Entry 1: Debit Equipment ₦237,500; Credit Accounts Payable ₦237,500.\nJournal Entry 2: Debit Accounts Payable ₦120,000; Credit Cash ₦120,000.

C. Journal Entry 1: Debit Equipment ₦237,500; Credit Accounts Payable ₦237,500.\nJournal Entry 2: Debit Cash ₦100,000; Credit Accounts Payable ₦100,000.

Correct D. Journal Entry 1: Debit Equipment ₦237,500; Credit Accounts Payable ₦237,500.\nJournal Entry 2: Debit Accounts Payable ₦100,000; Credit Cash ₦100,000.

Correct Answer: D

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