Neco 2025 Financial Accounting Question 1

Practice essay / theory question 1 from the 2025 Neco Financial Accounting examination. This question covers Accounting Concepts .

Neco 2025 Financial Accounting Essay / Theory

Topic: Accounting Concepts

Question 1 NECO • 2025 • FINANCIAL_ACCOUNTING • essay

ABC Trading Ltd. is a small wholesale business that has just started operations. The owner, Mr. Ade, wants to understand the underlying principles that guide the preparation of financial statements.

Question Parts

( a )

Define the going concern concept and explain why it is relevant to ABC Trading Ltd.

( b )

Distinguish between the accrual basis of accounting and the cash basis of accounting. Illustrate the difference by describing how a sale made on credit on 15 March would be recorded under each basis.

( c )

The entity uses the historical cost principle for its fixed assets. Discuss two advantages and two limitations of this principle in the context of a developing economy like Nigeria.

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About This Question

This is Neco 2025 Financial Accounting Question 1. It is one of the essay questions from the 2025 Neco Financial Accounting examination.

The question covers Accounting Concepts .

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