Practice neco model questions vol1 financial_accounting 2023 Past Questions

Question 1 View Details

The cash book for the month shows an opening cash balance of N100,000. The total cash receipts after allowing a discount amount to customers is N235,000. The discount allowed on cash sales is (6\%\) of the gross cash sales. Cash purchases amount to N180,000 and a discount received on these purchases is (5\%\) of the purchase price. Cash payments for expenses total N30,000. Determine the closing cash balance at the end of the month.

A. 125000

B. 140000

Correct C. 134000

D. 149000

Correct Answer: C

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Question 2 View Details

A machine was purchased on 1\,January\,2020 for N500,000. Its estimated residual value is N50,000 and its useful life is 5\,years. For the first two years the company used the straight‑line method of depreciation. From 1\,January\,2022 the company switched to the diminishing‑balance method at a rate of 40\% per annum applied to the book value at the beginning of each year. What is the book value of the machine on 31\,December\,2023?

A. 140000

B. 192000

C. 100000

Correct D. 115200

Correct Answer: D

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Question 3 View Details

The trial balance of XYZ Ltd as at 31\,December\,2023 includes the following balances (debit balances are shown without a sign, credit balances are shown with a "Cr" suffix): Cash 120,000 Accounts Receivable 80,000 Inventory 150,000 Equipment 300,000 Accumulated Depreciation Equipment 90,000 Cr Accounts Payable 70,000 Cr Capital 500,000 Cr Drawings 30,000 Sales Revenue 400,000 Cr Purchases 200,000 Rent Expense 45,000 Salaries Expense 60,000 The trial balance does not balance; the total debits exceed total credits. Assuming the omission is an expense that should be recorded on the debit side, determine the amount of the omitted expense required to balance the trial balance.

A. 80000

B. 70000

C. 65000

Correct D. 75000

Correct Answer: D

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Question 4 View Details

A sole trader's incomplete records for the year provide the following information: - Opening stock: N50,000 - Purchases (all on credit): N200,000 - Closing stock: N40,000 - Gross profit margin: 30\% of sales - Credit sales: N180,000 - Operating expenses (excluding interest): N20,000 - Interest expense: N5,000 - Net profit reported: N45,000 Cash purchases amount to N30,000. No other information is given. Determine (a) the cash sales for the period and (b) the amount of drawings made by the trader during the year.

A. Cash sales = 125000; Drawings = 15000

Correct B. Cash sales = 120000; Drawings = 20000

C. Cash sales = 130000; Drawings = 10000

D. Cash sales = 115000; Drawings = 25000

Correct Answer: B

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Question 5 View Details

The following transactions were recorded in the journal of ABC Ltd for March. The opening cash balance on 1\,March was N100,000. 1. 3 Mar - Purchased inventory on credit N150,000, terms 2/10, n/30. 2. 5 Mar - Sold goods for cash N200,000; cost of goods sold N120,000. 3. 10 Mar - Paid cash for utilities N8,000. 4. 12 Mar - Received cash from a customer for a previous credit sale N50,000, taking a 2 % discount. 5. 15 Mar - Paid cash for the inventory purchased on 3 Mar, within the discount period. 6. 20 Mar - Paid cash for salaries N30,000. 7. 25 Mar - Purchased equipment for cash N60,000. Prepare the cash book (showing total cash receipts and total cash payments) and determine the closing cash balance at 31 March.

A. 106000

B. 98000

Correct C. 104000

D. 102000

Correct Answer: C

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Question 6 View Details

During March, XYZ Ltd recorded the following in its books of original entry:\n\n- Purchases Journal: credit purchases of \(120,000\); purchase returns of \(8,000\); freight‑in of \(5,000\).\n- Cash Book (receipts side): cash received from customers \(45,000\); cash paid to suppliers \(30,000\).\n- Sales Journal: cash sales \(70,000\); credit sales \(90,000\); sales returns \(6,000\).\n\nAssuming all entries are correctly posted to the appropriate ledger accounts, what is the balance (debit or credit) and amount shown in the Purchases Journal at the end of the month?

A. Credit 117,000

B. Debit 113,000

Correct C. Debit 117,000

D. Debit 125,000

Correct Answer: C

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Question 7 View Details

The Trade Receivables Control Account of ABC Co. shows an opening balance of \(50,000\) (debit). During the year the subsidiary ledger recorded the following transactions that have not yet been posted to the control account:\n\n- Credit sales to customers: \(180,000\).\n- Cash receipts from customers (as shown in the cash book): \(130,000\).\n- Sales returns recorded in the returns journal: \(12,000\).\n\nIf the control account is to be balanced at year end, what should be the closing balance (debit or credit) and its amount in the Trade Receivables Control Account?

A. Debit 80,000

B. Debit 98,000

Correct C. Debit 88,000

D. Credit 88,000

Correct Answer: C

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Question 8 View Details

The trial balance of LMN Ltd as at 31 December shows total debits of \(452,000\) and total credits of \(447,500\). The accountant believes the discrepancy is caused by a single error in the books of original entry. Identify the most likely type of error and state the amount that should be transferred to the suspense account to make the trial balance agree.

A. Transposition error; credit suspense account with 5,000

B. Single‑sided (addition) error; debit suspense account with 4,500

Correct C. Single‑sided (addition) error; credit suspense account with 4,500

D. Single‑sided (addition) error; credit suspense account with 5,500

Correct Answer: C

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Question 9 View Details

A company purchased office equipment for cash amounting to \(25,000\). Record the journal entry for this transaction.

Correct A. Debit Office Equipment 25,000; Credit Cash 25,000

B. Debit Cash 25,000; Credit Office Equipment 25,000

C. Debit Office Equipment 20,000; Credit Cash 20,000

D. Debit Office Equipment 25,000; Credit Accounts Payable 25,000

Correct Answer: A

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Question 10 View Details

The business received \(15,000\) in cash from a customer on account. Record the appropriate journal entry.

A. Debit Cash 15,000; Credit Sales Revenue 15,000

B. Debit Cash 15,000; Credit Accounts Payable 15,000

Correct C. Debit Cash 15,000; Credit Trade Receivables 15,000

D. Debit Trade Receivables 15,000; Credit Cash 15,000

Correct Answer: C

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Question 11 View Details

During the year the following information relates to a manufacturing concern:\n\n- Opening work‑in‑process (WIP) inventory: ₦50,000 (raw material ₦20,000, labour ₦15,000, overhead ₦15,000).\n- Raw material purchases: ₦200,000.\n- Raw material used in production: ₦180,000.\n- Direct labour incurred: ₦120,000.\n- Manufacturing overhead incurred: ₦90,000, of which 70% is applied to production.\n- Closing WIP inventory: ₦45,000 (raw material ₦10,000, labour ₦20,000, overhead ₦15,000).\n\nCalculate the cost of goods manufactured for the period.

A. ₦388,000

B. ₦378,000

Correct C. ₦368,000

D. ₦358,000

Correct Answer: C

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Question 12 View Details

The following is the unadjusted trial balance of XYZ Ltd.:\n\nCash \(\text{Dr}\) ₦150,000\nAccounts Receivable \(\text{Dr}\) ₦80,000\nEquipment \(\text{Dr}\) ₦300,000\nAccumulated Depreciation - Equipment \(\text{Cr}\) ₦0\nSupplies \(\text{Dr}\) ₦20,000\nAccounts Payable \(\text{Cr}\) ₦70,000\nCapital \(\text{Cr}\) ₦400,000\nDrawings \(\text{Dr}\) ₦30,000\nService Revenue \(\text{Cr}\) ₦250,000\nSalaries Expense \(\text{Dr}\) ₦90,000\n\nAdjusting entries are required for:\n1. Depreciation on equipment (straight‑line, 5‑year life, no salvage).\n2. Supplies on hand at year‑end amount to ₦5,000.\n3. Salaries accrued but unpaid amount to ₦10,000.\n\nAfter posting the adjusting entries, what is the amount of discrepancy (difference) between total debits and total credits in the adjusted trial balance?

A. ₦45,000 (debit side higher)

B. ₦55,000 (credit side higher)

Correct C. ₦50,000 (credit side higher)

D. ₦50,000 (debit side higher)

Correct Answer: C

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Question 13 View Details

A partnership of A and B shares profit in the ratio 3:2. Their capital balances are A: ₦120,000 and B: ₦80,000.\n\nC is admitted as a new partner. The terms of admission are as follows:\n1. C brings in cash of ₦100,000 for a 25% share of future profits.\n2. Goodwill of the firm is valued at ₦60,000 and is to be shared between the existing partners in their old profit‑sharing ratio.\n3. At the time of admission the partnership re‑values its building from a book value of ₦200,000 to a market value of ₦250,000. The revaluation surplus is to be shared among all partners in the new profit‑sharing ratio.\n4. After admission the profit‑sharing ratio becomes A:B:C = 2:1:1.\n\nDetermine (a) the amount of goodwill credited to A and B, (b) the revaluation surplus allocated to each partner, and (c) the new capital balances of A, B and C after admission.

A. Goodwill - A: ₦40,000; B: ₦20,000. Revaluation surplus - A: ₦25,000; B: ₦12,500; C: ₦12,500. New capitals - A: ₦185,000; B: ₦112,500; C: ₦112,500.

B. Goodwill - A: ₦36,000; B: ₦24,000. Revaluation surplus - A: ₦30,000; B: ₦10,000; C: ₦10,000. New capitals - A: ₦186,000; B: ₦114,000; C: ₦110,000.

Correct C. Goodwill - A: ₦36,000; B: ₦24,000. Revaluation surplus - A: ₦25,000; B: ₦12,500; C: ₦12,500. New capitals - A: ₦181,000; B: ₦116,500; C: ₦112,500.

D. Goodwill - A: ₦30,000; B: ₦30,000. Revaluation surplus - A: ₦20,000; B: ₦15,000; C: ₦15,000. New capitals - A: ₦170,000; B: ₦125,000; C: ₦115,000.

Correct Answer: C

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Question 14 View Details

A debit of ₦15,000 is posted to the Salaries Expense account. State the effect of this transaction on the accounting equation \(\text{Assets} = \text{Liabilities} + \text{Owner's Equity}\).

Correct A. Owner's Equity decreases by ₦15,000; Assets and Liabilities are unchanged.

B. Owner's Equity decreases by ₦15,000; Assets increase by ₦15,000; Liabilities unchanged.

C. Assets decrease by ₦15,000; Liabilities unchanged; Owner's Equity unchanged.

D. Liabilities increase by ₦15,000; Owner's Equity decreases by ₦15,000; Assets unchanged.

Correct Answer: A

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Question 15 View Details

The following are the balances in the trial balance of ABC Ltd. (all amounts in ₦):\n\nSales Revenue \(\text{Cr}\) 500,000\nOpening Inventory \(\text{Dr}\) 50,000\nPurchases \(\text{Dr}\) 200,000\nClosing Inventory \(\text{Dr}\) 40,000 (to be adjusted)\nMachinery (cost) \(\text{Dr}\) 120,000\nAccumulated Depreciation - Machinery \(\text{Cr}\) 0\nRent Expense \(\text{Dr}\) 30,000\nSalaries Expense \(\text{Dr}\) 80,000\nLoan Payable \(\text{Cr}\) 100,000\nCapital \(\text{Cr}\) 150,000\nDrawings \(\text{Dr}\) 20,000\n\nAdditional information:\n1. Machinery has a useful life of 8 years, no salvage value; depreciation for the year is required.\n2. Interest on the loan is 10% per annum and has not been recorded.\n3. Physical count shows closing inventory is actually ₦45,000.\n\nPrepare the statement of profit or loss for the year and compute the closing capital (assume the entire profit is transferred to capital and drawings are deducted).

A. Net profit = ₦150,000; Closing capital = ₦280,000

B. Net profit = ₦165,000; Closing capital = ₦295,000

C. Net profit = ₦155,000; Closing capital = ₦285,000

Correct D. Net profit = ₦160,000; Closing capital = ₦290,000

Correct Answer: D

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Question 16 View Details

A business bought equipment for \u20a5500,000 cash. During the year it recorded depreciation of \u20a550,000 on the equipment. What is the equipment's book value at the end of the year?

Correct A. 450000

B. 400000

C. 500000

D. 550000

Correct Answer: A

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Question 17 View Details

During the year a trading business had opening stock of \u20a5120,000, sales of \u20a5480,000 and a gross profit ratio of \(30\%\) of sales. Cash payments to suppliers amounted to \u20a5150,000 and credit purchases outstanding at year‑end were \u20a580,000. All purchases were subject to a trade discount of \(5\%\). Operating expenses for the period were \u20a520,000. Using the incomplete records method, determine the closing stock and the net profit for the year.

A. Closing stock = 10000; Net profit = 140000

Correct B. Closing stock = 14000; Net profit = 124000

C. Closing stock = 16000; Net profit = 115000

D. Closing stock = 12000; Net profit = 130000

Correct Answer: B

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Question 18 View Details

The following ledger balances are extracted from the trial balance of XYZ Ltd for the year ended 31 December:\n\n- Sales (Credit) .......... \u20a5850,000\n- Purchases (Debit) ........ \u20a5540,000\n- Salaries (Debit) ........ \u20a5120,000\n- Rent (Debit) ............ \u20a560,000\n- Capital (Credit) ........ \u20a5300,000\n- Opening Stock (Debit) ... \u20a580,000\n\nAdditional information:\n1. Equipment cost \u20a5200,000; depreciation is 10% per annum (not yet recorded).\n2. Outstanding salaries at year‑end amount to \u20a515,000 (not recorded).\n3. Closing stock was counted as \u20a570,000 but not posted.\nUsing this information, compute the net profit for the year and the capital at year‑end.

A. Net profit = 75000; Closing capital = 375000

B. Net profit = 95000; Closing capital = 395000

C. Net profit = 85000; Closing capital = 395000

Correct D. Net profit = 85000; Closing capital = 385000

Correct Answer: D

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Question 19 View Details

The Trade Receivables Control Account for ABC Co. shows the following entries for the year:\n\nOpening balance (debit) .......... \u20a5200,000\nCredit sales ........................ \u20a5500,000\nCash received from customers ....... \u20a5420,000\nSales returns ...................... \u20a530,000\nBad debts written off .............. \u20a510,000\n\nAt year‑end a provision for doubtful debts of 5% of the closing receivables is required. Determine (a) the gross closing balance of the control account and (b) the amount of the provision.

Correct A. Gross closing balance = 240000; Provision = 12000

B. Gross closing balance = 250000; Provision = 12500

C. Gross closing balance = 240000; Provision = 13000

D. Gross closing balance = 235000; Provision = 11750

Correct Answer: A

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Question 20 View Details

A company purchased inventory on credit for a list price of \u20a5300,000. The supplier offered a trade discount of 5% and cash terms of 2/10, n/30. The invoice was recorded in the Purchases Journal without the trade discount. The company later paid the amount within the discount period. Determine (a) the correct amount that should have been recorded in the Purchases Journal after the trade discount, and (b) the cash amount actually paid after taking the cash discount.

A. Correct purchase journal amount = 285000; Cash paid = 279000

B. Correct purchase journal amount = 300000; Cash paid = 294000

Correct C. Correct purchase journal amount = 285000; Cash paid = 279300

D. Correct purchase journal amount = 270000; Cash paid = 264600

Correct Answer: C

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Question 21 View Details

The trial balance of ABC Ltd shows the following figures (in Naira):\n\n- Sales: 1,200,000\n- Sales Returns: 60,000\n- Opening Stock: 150,000\n- Purchases: 800,000\n- Purchase Returns: x (unknown)\n- Carriage Inwards: 40,000\n- Closing Stock: y (unknown)\n- Gross Profit is 25% of Net Sales.\n- Total expenses (excluding cost of goods sold) amount to 180,000.\n- Closing Stock is 30% of Opening Stock.\n\nDetermine the amount of Purchase Returns (x).

Correct A. 90,000

B. 80,000

C. 100,000

D. 70,000

Correct Answer: A

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Question 22 View Details

The single‑column cash book of XYZ Co. shows the following entries (all amounts in Naira):\n\nOpening balance (debit): 40,000\n\nReceipts:\n- Cash sales: ?\n- Received from debtors: 120,000\n- Loan received: 80,000\n\nPayments:\n- Purchases paid: 150,000\n- Rent paid: 30,000\n- Salaries paid: 45,000\n- Interest paid: 5,000\n\nClosing balance (debit): 30,000\n\nThe cash book balances. Find the amount of cash sales.

A. 15,000

B. 25,000

C. 30,000

Correct D. 20,000

Correct Answer: D

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Question 23 View Details

The following data relate to the production of widgets for the year (all figures in Naira):\n\n- Opening Work‑in‑Progress (WIP): 120,000 (contains 2,000 units, each 40% complete for materials, 30% for labour, 20% for overhead).\n- Closing WIP: 80,000 (contains 1,500 units, each 50% complete for materials, 40% for labour, 30% for overhead).\n- Direct Materials used: 460,000\n- Direct Labour incurred: 300,000\n- Manufacturing overhead is applied at 180% of Direct Labour.\n- Actual overhead incurred: 560,000\n- Units started during the period: 5,000.\n\nCalculate the cost per unit of the goods transferred out (rounded to two decimal places).

A. 250.50

Correct B. 247.27

C. 260.00

D. 245.00

Correct Answer: B

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Question 24 View Details

A government department received an original appropriation of 12,000,000 Naira for the fiscal year. The actual expenditures were as follows (in Naira):\n\n- Salaries: 5,400,000\n- Office supplies: 800,000\n- Capital acquisition (new equipment): 2,500,000\n- Maintenance: 600,000\n- Miscellaneous: 300,000\n\nStatutory rules state that any unspent balance exceeding 5\% of the original appropriation must be returned to the central fund, while any unspent amount up to 5\% may be carried forward to the next year.\n\nDetermine the amount that must be returned to the central fund and the amount that may be carried forward.

A. Returned: 600,000; Carried forward: 1,800,000

B. Returned: 2,400,000; Carried forward: 0

Correct C. Returned: 1,800,000; Carried forward: 600,000

D. Returned: 1,200,000; Carried forward: 1,200,000

Correct Answer: C

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Question 25 View Details

A company incurred repair expenses of 10,000 Naira on a machine during the year. The repair is expected to extend the machine's useful life by two years. According to the matching concept, should this amount be recorded as a capital expenditure (added to the cost of the machine) or as a revenue expenditure (expensed in the current period)?

A. expensed

B. amortised

C. deferred

Correct D. capitalised

Correct Answer: D

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