Neco Model Questions Vol1 2018 Financial Accounting Question 42

Practice objective / multiple choice question 42 from the 2018 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2018 Financial Accounting Objective / Multiple Choice Medium Difficulty
Question 42 NECO_MODEL_QUESTIONS_VOL1 • 2018 • FINANCIAL_ACCOUNTING • objective

The following trial balance was prepared (all figures in naira).\n\nCash - Dr \(560,000\)\nBank - Dr \(340,000\)\nInventory - Dr \(720,000\)\nEquipment - Dr \(1,200,000\)\nPurchases - Dr \(1,050,000\)\nRent Expense - Dr \(120,000\)\nSalaries Expense - Dr \(210,000\)\nAccounts Payable - Cr \(1,150,000\)\nSales Revenue - Cr \(1,800,000\)\nCapital - Cr \(500,000\)\n\nThe trial balance does not balance. Assuming only one account contains an error, find the amount by which the trial balance is out of balance and identify the account that is most likely misstated.

Answer Options

A. Out of balance by ₦850,000; the Capital account is overstated by that amount (should be ₦350,000).
B. Out of balance by ₦750,000; the Purchases account is understated by that amount (should be ₦1,800,000).
C. Out of balance by ₦650,000; the Capital account is understated by that amount (should be ₦1,150,000).
Correct Answer D. Out of balance by ₦750,000; the Capital account is understated by that amount (should be ₦1,250,000).
Correct Answer
D
Correct Option:
Out of balance by ₦750,000; the Capital account is understated by that amount (should be ₦1,250,000).

About This Question

This is Neco Model Questions Vol1 2018 Financial Accounting Question 42. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Medium .

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