Neco Model Questions Vol1 2025 Financial Accounting Question 16

Practice objective / multiple choice question 16 from the 2025 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2025 Financial Accounting Objective / Multiple Choice Easy Difficulty

Question 16 NECO_MODEL_QUESTIONS_VOL1 • 2025 • FINANCIAL_ACCOUNTING • objective

On 1 March, ABC Ltd purchased a delivery van for \(\,\text{₦}1,200,000\) cash and paid \(\,\text{₦}150,000\) for insurance covering the next six months. Record the journal entries for these transactions.

Answer Options

A. 1. Debit Delivery Van ₦1,200,000; Credit Accounts Payable ₦1,200,000. 2. Debit Prepaid Insurance ₦150,000; Credit Cash ₦150,000.

B. 1. Debit Delivery Van ₦1,200,000; Credit Cash ₦1,200,000. 2. Debit Prepaid Insurance ₦120,000; Credit Cash ₦120,000.

Correct Answer C. 1. Debit Delivery Van ₦1,200,000; Credit Cash ₦1,200,000. 2. Debit Prepaid Insurance ₦150,000; Credit Cash ₦150,000.

D. 1. Debit Delivery Van ₦1,200,000; Credit Cash ₦1,200,000. 2. Debit Insurance Expense ₦150,000; Credit Cash ₦150,000.

Correct Answer

Correct Option:

1. Debit Delivery Van ₦1,200,000; Credit Cash ₦1,200,000. 2. Debit Prepaid Insurance ₦150,000; Credit Cash ₦150,000.

About This Question

This is Neco Model Questions Vol1 2025 Financial Accounting Question 16. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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