Practice neco financial_accounting 2023 Past Questions

Question 1 View Details

A machine was purchased on 1 Jan 2020 for \u20a6600,000. It was originally depreciated using the straight‑line method over 5 years. After two full years the book value was \u20a6420,000. The company then decides to switch to the double‑declining‑balance method for the remaining years, targeting a salvage value of \u20a650,000 at the end of the useful life. What depreciation expense should be recorded for the third year (the first year under the new method)?

Correct A. 168000

B. 123333

C. 180000

D. 280000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 2 View Details

The following balances were extracted from the general ledger at 31 Dec 2023 (all amounts in \u20a6):\n\nCash 120,000 (Dr)\nAccounts Receivable 80,000 (Dr)\nInventory 150,000 (Dr)\nPrepaid Insurance 24,000 (Dr)\nEquipment 200,000 (Dr)\nAccumulated Depreciation - Equipment 30,000 (Cr)\nAccounts Payable 70,000 (Cr)\nSalaries Payable 15,000 (Cr)\nCapital 300,000 (Cr)\nDrawings 40,000 (Dr)\nSales Revenue 350,000 (Cr)\nCost of Goods Sold 210,000 (Dr)\nSalaries Expense 45,000 (Dr)\nInsurance Expense 6,000 (Dr)\n\nAdditional information:\n- Equipment is depreciated straight‑line over 5 years with no salvage; one year of depreciation has not yet been recorded.\n- One month of a 12‑month prepaid insurance policy has expired.\n- A customer owing \u20a620,000 was written off as bad debt on 31 Dec.\n\nPrepare the adjusted trial balance and state the net profit for the year.

A. 115000

B. 95000

Correct C. 110000

D. 100000

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 3 View Details

At 31 Dec 2023 the following balances (all in \u20a6) were recorded for Company Z:\n\nShare capital - ordinary 500,000\nShare premium 150,000\nRetained earnings (beginning) 200,000\nRevaluation surplus 80,000\nNon‑controlling interest 30,000\nProperty, plant and equipment (cost) 1,200,000\nAccumulated depreciation - PPE 300,000\nInvestments 430,000\nInventory 250,000\nTrade receivables 180,000\nCash and bank 90,000\nTrade payables 210,000\nTax payable 25,000\nLong‑term loan 400,000\n\nDuring the year the following events occurred:\n1. The company issued 10,000 new ordinary shares at a premium of \u20a55 per share.\n2. Profit before tax was \u20a6180,000; tax expense incurred was \u20a645,000, of which \u20a615,000 remains unpaid at year‑end.\n3. PPE was revalued upward by \u20a6120,000 (the increase is transferred to other comprehensive income).\n4. Dividends of \u20a660,000 were paid.\n5. An impairment loss on inventory of \u20a630,000 was recognised.\n\nPrepare a statement of financial position as at 31 Dec 2023 showing total assets, total liabilities and total equity (including non‑controlling interest).

A. 1950000

B. 2040000

C. 1880000

Correct D. 1940000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 4 View Details

At 1 Jan 2023 Company X had the following equity balances (all in \u20a6):\n\nShare capital - ordinary 800,000\nShare premium 120,000\nRetained earnings 250,000\nRevaluation surplus 100,000\nNon‑controlling interest 40,000\n\nDuring 2023 the following events occurred:\n1. Issued 5,000 ordinary shares with a nominal value of \u20a610 each at \u20a625 per share.\n2. Repurchased 2,000 of its own ordinary shares at \u20a630 per share (held as treasury shares).\n3. Profit after tax for the year was \u20a6200,000.\n4. Declared and paid interim dividends of \u20a630,000 and final dividends of \u20a620,000 (cash).\n5. Transferred \u20a615,000 from retained earnings to a newly created "Reserves for contingencies".\n6. Recognised a foreign‑currency translation gain of \u20a612,000 (included in other comprehensive income).\n\nPrepare a statement of changes in equity for 2023 showing the closing balance of each component of equity (including treasury shares as a negative component) and compute the total equity at year‑end.

A. 1597000

B. 1525000

C. 1462000

Correct D. 1537000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 5 View Details

The following information relates to Company Y for the year ended 31 Dec 2023 (all amounts in \u20a6):\n\nProfit before tax: 250,000\nTax expense paid: 45,000\nDepreciation expense: 40,000\nGain on sale of equipment: 15,000 (included in profit)\nIncrease in inventories: 30,000\nDecrease in trade receivables: 20,000\nIncrease in trade payables: 25,000\nPurchase of new equipment (cash): 120,000\nProceeds from sale of old equipment (cash): 80,000\nIssue of share capital (cash received): 100,000\nPayment of dividends (cash): 40,000\nRepayment of long‑term loan (cash): 60,000\nInterest paid (cash): 20,000\n\nPrepare a statement of cash flows for the year using the indirect method, showing cash flows from operating, investing and financing activities, and compute the net increase (or decrease) in cash and cash equivalents for the year.

A. 165000

Correct B. 185000

C. 145000

D. 205000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 6 View Details

XYZ Ltd prepared a bank reconciliation for the month ended 31 May. The bank statement balance is \( \text{₦}150,000 \) and the book cash balance is \( \text{₦}145,000 \). Outstanding checks total \( \text{₦}20,000 \) of which one is known to be \( \text{₦}12,000 \). Deposits in transit total \( \text{₦}15,000 \) of which one is known to be \( \text{₦}8,000 \). The bank charged a service fee of \( \text{₦}500 \) that has not been recorded in the books, and a bank error credited the account with \( \text{₦}2,000 \). A customer's cheque of \( \text{₦}3,000 \) was returned unpaid and has not yet been deducted from the books. Determine the adjusted cash balance per the book after all items are accounted for.

Correct A. ₦136,500

B. ₦134,500

C. ₦137,500

D. ₦139,500

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 7 View Details

At year‑end the Trade Receivables control account shows a closing balance of \( \text{₦}85,000 \). The total of the subsidiary ledger of individual customers is \( \text{₦}78,000 \). During the year a credit note of \( \text{₦}2,500 \) was issued but not posted to the control account, and a cash receipt of \( \text{₦}4,000 \) was posted to the control account but omitted from the subsidiary ledger. What is the amount of the remaining unrecorded error that must be adjusted to bring the control account into agreement with the subsidiary ledger?

A. ₦4,000

B. ₦7,000

Correct C. ₦500

D. ₦2,500

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 8 View Details

Three partners A, B and C share profits in the ratio \(3:2:1\). Their capital balances at year‑end are \( \text{₦}120,000\), \( \text{₦}80,000\) and \( \text{₦}40,000\) respectively. The partnership wishes to admit a new partner D who will receive a \(10\%\) share of future profits. To accommodate D, the partners agree to recognise goodwill of \( \text{₦}60,000\) and a revaluation surplus of \( \text{₦}30,000\). Both goodwill and the revaluation surplus are to be distributed among the existing partners in their profit‑sharing ratio. D will contribute cash equal to his share of goodwill plus his share of the revaluation surplus. Calculate D's cash contribution and the new capital balances of A, B, C and D after admission.

A. D contributes ₦9,000; new capitals - A: ₦150,000, B: ₦100,000, C: ₦50,000, D: ₦9,000

B. D contributes ₦9,000; new capitals - A: ₦165,000, B: ₦115,000, C: ₦55,000, D: ₦9,000

Correct C. D contributes ₦9,000; new capitals - A: ₦165,000, B: ₦110,000, C: ₦55,000, D: ₦9,000

D. D contributes ₦12,000; new capitals - A: ₦165,000, B: ₦110,000, C: ₦55,000, D: ₦12,000

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 9 View Details

On 1 March XYZ Ltd purchased equipment with a list price of \( \text{₦}250,000\). A trade discount of \(5\%\) was granted and a cash discount of \(2\%\) was offered for payment within 10 days. The company paid the discounted amount of \( \text{₦}232,750\) on 5 March and later incurred freight‑in of \( \text{₦}5,000\) paid on 8 March. The trade discount was mistakenly recorded as a purchase discount. Prepare the correct journal entries to record the purchase, the discounts and the freight, and state the total amount that should be capitalised as the cost of the equipment.

Correct A. ₦237,750

B. ₦240,000

C. ₦237,500

D. ₦232,750

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 10 View Details

The cash book for April shows opening balances of cash \( \text{₦}5,000\) and bank \( \text{₦}20,000\). Transactions during the month are:\n\nReceipts - cash sales \( \text{₦}12,000\); bank receipt from a customer \( \text{₦}8,000\); loan received (bank) \( \text{₦}5,000\).\n\nPayments - cash purchase of supplies \( \text{₦}3,000\); bank rent payment \( \text{₦}4,000\); cash dividend paid \( \text{₦}2,000\); bank equipment payment \( \text{₦}6,000\); a bank cheque of \( \text{₦}1,500\) issued but later dishonoured (returned on 30 April).\n\nAt month‑end the bank statement shows an unpresented cheque of \( \text{₦}2,000\) and a deposit in transit of \( \text{₦}3,000\). Compute the closing cash balance, the closing bank balance after accounting for the dishonoured cheque, and the adjusted bank balance after reconciling the unpresented cheque and deposit in transit. Also give the total cash position (cash plus adjusted bank).

A. Closing cash ₦12,000; closing bank ₦22,000; adjusted bank ₦23,000; total cash position ₦35,000

Correct B. Closing cash ₦12,000; closing bank ₦23,000; adjusted bank ₦24,000; total cash position ₦36,000

C. Closing cash ₦13,000; closing bank ₦23,000; adjusted bank ₦24,000; total cash position ₦37,000

D. Closing cash ₦12,000; closing bank ₦23,000; adjusted bank ₦25,000; total cash position ₦37,000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 11 View Details

Using the following information for a trading business for the year ended 31 December 2023:\n- Opening stock: \u20a4120,000\n- Purchases during the year: \u20a3340,000\n- Cash paid to suppliers: \u20a3260,000\n- Cash received from customers: \u20a3480,000\n- Trade receivables at year end: \u20a350,000\n- Trade payables at year end: \u20a380,000\n- Gross profit is \(30\%\) of sales.\nDetermine the value of the closing stock at year end.

A. 77000

B. 83000

Correct C. 89000

D. 95000

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 12 View Details

Given the trial balance (amounts in \u20a5) for the year ended 31 December 2023:\n\nCash 120,000\nAccounts receivable 80,000\nInventory 150,000\nEquipment cost 200,000\nAccumulated depreciation - Equipment 50,000\nAccounts payable 70,000\nBank loan 100,000\nRevenue 500,000\nCost of goods sold 260,000\nSalaries expense 90,000\nRent expense 30,000\nInterest expense 10,000\nOther expense 5,000\n\nAdditional information:\n1. Equipment is depreciated on a straight‑line basis over 5 years with no residual value.\n2. Prepaid rent of \u20a512,000 was on hand at 1 January 2023; \u20a54,800 of it has been used by year end.\n3. Salaries of \u20a56,000 are accrued at year end but not yet recorded.\n4. Income tax is charged at \(30\%\) of taxable profit.\n\nCalculate the net profit after tax for the year.

A. 40650

B. 42140

C. 35230

Correct D. 37940

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 13 View Details

During the year the trade receivables control account showed the following movements (all amounts in \u20a5):\n\nOpening balance: 45,000\nCredit sales: 320,000\nSales returns: 12,000\nCash received from debtors: 260,000\nClosing balance: 55,000\n\nIf the only other item affecting the account is discount allowed on early payment, determine the total discount allowed during the year.

A. 40000

B. 45000

C. 33000

Correct D. 38000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 14 View Details

On 15\u00a0March\u00a02023 the business purchased office furniture for \u20a545,000 cash. Record the journal entry for this transaction.

A. Debit Office Furniture ₥45,000; Credit Accounts Payable ₥45,000

B. Debit Office Furniture ₥50,000; Credit Cash ₥50,000

C. Debit Cash ₥45,000; Credit Office Furniture ₥45,000

Correct D. Debit Office Furniture \u20a545,000; Credit Cash \u20a545,000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 15 View Details

The cash book for June (amounts in \u20a5) records:\n\nCash receipts:\n- 5\u00a0June: Sales cash 80,000\n- 12\u00a0June: Received from debtor 25,000\n- 20\u00a0June: Interest received 2,000\n\nCash payments:\n- 8\u00a0June: Rent paid 15,000\n- 15\u00a0June: Paid to supplier 30,000\n- 22\u00a0June: Salaries paid 20,000\n\nThe balance carried down at 30\u00a0June is shown as a debit of 12,000. The bank statement shows a closing balance of 10,500. It is known that a cheque for 1,500 was omitted from the cash book and a cash receipt of 800 was recorded twice.\n\nAfter correcting the cash book for these errors, what should be the correct cash book balance (debit) at 30\u00a0June?

Correct A. 9700

B. 9500

C. 11200

D. 10800

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 16 View Details

The trial balance of a company shows total debits of \(150,000\) and total credits of \(150,000\). It is later discovered that the Sales account was recorded as \(45,600\) instead of the correct amount \(54,600\) (a transposition error). All other account balances are correct.\n\n(a) What should be the corrected total of the trial balance (debits and credits) after fixing the error?\n\n(b) What amount should be entered in the Suspense Account (as a credit) to restore equality?

A. Corrected totals: \(150,000\) debits and \(150,000\) credits; Suspense Account credit = \(9,600\)

Correct B. Corrected totals: \(150,000\) debits and \(150,000\) credits; Suspense Account credit = \(9,000\)

C. Corrected totals: \(159,600\) debits and \(159,600\) credits; Suspense Account credit = \(9,000\)

D. Corrected totals: \(150,000\) debits and \(150,000\) credits; Suspense Account credit = \(0\)

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 17 View Details

A Merchandise Inventory ledger shows an opening debit balance of \(30,000\). During the year the following entries are posted to the account:\n- Purchases: debit \(85,000\)\n- Sales returns: credit \(5,000\)\n- Cost of Goods Sold (COGS): credit \(?\)\nThe trial balance for the period totals \(115,000\) on both the debit and credit sides, and the only other credit entry affecting inventory is Sales (credit) \(70,000\). Determine (a) the amount of COGS and (b) the closing balance of Merchandise Inventory.

A. COGS = \(40,000\); Closing Inventory balance = \(65,000\) (debit)

B. COGS = \(45,000\); Closing Inventory balance = \(65,000\) (debit)

Correct C. COGS = \(40,000\); Closing Inventory balance = \(70,000\) (debit)

D. COGS = \(35,000\); Closing Inventory balance = \(75,000\) (debit)

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 18 View Details

On 1 March a company purchased machinery costing \(120,000\). It paid \(30,000\) in cash and the balance was placed on a 60‑day credit. Record the appropriate journal entry.

A. Debit Machinery 120,000; Credit Cash 30,000; Credit Notes Payable 90,000

B. Debit Machinery 120,000; Credit Cash 90,000; Credit Accounts Payable 30,000

Correct C. Debit Machinery 120,000; Credit Cash 30,000; Credit Accounts Payable 90,000

D. Debit Machinery 150,000; Credit Cash 30,000; Credit Accounts Payable 120,000

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 19 View Details

State the "going concern" concept and explain one implication of this concept for the valuation of assets in financial statements.

A. The going‑concern concept assumes the business will cease operations soon; therefore assets are valued at liquidation values rather than at cost less depreciation.

Correct B. The going‑concern concept assumes the business will continue operating; therefore assets are valued at cost less depreciation, not at liquidation values.

C. The going‑concern concept assumes the business will continue operating; therefore assets are valued at market fair value, not at cost less depreciation.

D. The going‑concern concept assumes the business will continue operating; therefore assets are valued at liquidation values, not at cost less depreciation.

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 20 View Details

A government department prepared its annual financial statements with the following information:\n- Budgeted revenue: \(200,000\)\n- Cash receipts during the year: \(180,000\) (this includes \(15,000\) of unearned revenue that was recorded as cash receipts)\n- Grant received: \(30,000\) of which \(10,000\) is conditional on future performance and must be recognised as a liability until the condition is satisfied\n- Expenses incurred: \(170,000\) (of which \(20,000\) are accrued but not yet paid)\nDetermine: (a) total revenue to be reported in the statement of financial performance, (b) total expenses, (c) the surplus or deficit for the year, and (d) the amount to be shown as "Deferred Revenue" (liability) on the statement of financial position.

A. (a) Revenue = \(180,000\)\n(b) Expenses = \(160,000\)\n(c) Surplus = \(20,000\)\n(d) Deferred Revenue (liability) = \(25,000\)

Correct B. (a) Revenue = \(185,000\)\n(b) Expenses = \(170,000\)\n(c) Surplus = \(15,000\)\n(d) Deferred Revenue (liability) = \(25,000\)

C. (a) Revenue = \(175,000\)\n(b) Expenses = \(190,000\)\n(c) Surplus = \(-15,000\)\n(d) Deferred Revenue (liability) = \(25,000\)

D. (a) Revenue = \(190,000\)\n(b) Expenses = \(170,000\)\n(c) Surplus = \(20,000\)\n(d) Deferred Revenue (liability) = \(15,000\)

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 21 View Details

The municipal government recorded the following for the fiscal year: Cash receipts: ₦12,500,000; Cash payments: ₦9,800,000; Accrued revenue at year‑end: ₦1,200,000; Prepaid expenses at year‑end: ₦300,000; Deferred revenue at year‑end: ₦500,000; Accrued expenses at year‑end: ₦400,000; Opening fund balance: ₦2,000,000. Using the accrual basis, calculate the change in the fund balance for the year.

Correct A. 3300000

B. 3200000

C. 2700000

D. 3500000

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 22 View Details

At the end of March, a company's bank statement shows a balance of ₦5,750,000, while its cash book balance is ₦5,620,000. The following items are identified: Deposits in transit: ₦120,000; Outstanding checks: ₦85,000; Bank service charge: ₦2,500 (deducted by the bank but not yet recorded); Interest earned: ₦1,800 (added by the bank but not yet recorded); A cash‑book error: a cheque of ₦45,000 was mistakenly recorded as ₦54,000. What is the corrected cash‑book balance after incorporating all adjustments?

A. 5618300

B. 5632300

Correct C. 5628300

D. 5629800

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 23 View Details

An equipment costing ₦8,000,000 has an estimated salvage value of ₦800,000 and a useful life of 5 years. The company depreciates the asset using the double‑declining‑balance method for the first three years and then switches to the straight‑line method for the remaining years. Determine the depreciation expense for year 4.

A. 400000

B. 520000

C. 480000

Correct D. 464000

Correct Answer: D

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 24 View Details

A machine was purchased for ₦5,000,000 with an estimated salvage value of ₦500,000 and an estimated total production of 200,000 units. Using the units‑of‑production method, calculate the depreciation expense for year 3 if the actual production during that year was 45,000 units.

A. 1050000

Correct B. 1012500

C. 900000

D. 1125000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 25 View Details

A trading business has the following information for the year: Opening inventory: ₦800,000; Sales: ₦2,500,000; Gross profit ratio: 30 % of sales; Opening accounts payable: ₦150,000; Closing accounts payable: ₦200,000; Cash payments to suppliers: ₦1,400,000. No purchases ledger is kept. Using the gross‑profit method, determine the amount of purchases made during the year.

A. 1550000

Correct B. 1450000

C. 1350000

D. 1250000

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

neco 2023 financial_accounting | Objective

Master the Exam!

Help others prepare! Share this practice hub: