Practice post utme ksu accounting 2020 Past Questions

Question 1

A company's trial balance shows a debit balance of ₦12,000 in the account 'Rent Received' and a credit balance of ₦8,000 in the account 'Rent Paid'. What is the correct journal entry to record the correction of this error?

A. ₦4,000 debit to Rent Paid and ₦4,000 credit to Rent Received

Correct B. ₦4,000 debit to Rent Received and ₦4,000 credit to Rent Paid

C. ₦8,000 debit to Rent Paid and ₦12,000 credit to Rent Received

D. ₦12,000 debit to Rent Received and ₦8,000 credit to Rent Paid

Correct Answer: B

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Question 2

A company issues 10,000 ordinary shares of ₦1 each at a premium of ₦0.50 per share. The issue expenses amount to ₦5,000. Prepare the journal entry to record the issue of shares.

A. ₦50,000 credit to Share Capital and ₦5,000 debit to Share Premium

B. ₦50,000 credit to Share Premium and ₦5,000 debit to Share Capital

Correct C. ₦50,000 credit to Share Capital and ₦5,000 debit to Issue Expenses

D. ₦50,000 credit to Share Premium and ₦5,000 debit to Issue Expenses

Correct Answer: C

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Question 3

A company's balance sheet shows a current ratio of 2:1. If the total current assets are ₦120,000 and the total current liabilities are ₦60,000, what is the correct interpretation of the current ratio?

Correct A. The company has sufficient liquidity to meet its short-term obligations

B. The company has insufficient liquidity to meet its short-term obligations

C. The company has a high level of liquidity and can take on more debt

D. The company has a low level of liquidity and should reduce its debt

Correct Answer: A

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Question 4

A company's trial balance shows a debit balance of ₦15,000 in the account 'Salaries and Wages' and a credit balance of ₦10,000 in the account 'Salaries and Wages Payable'. What is the correct journal entry to record the correction of this error?

A. ₦5,000 debit to Salaries and Wages Payable and ₦5,000 credit to Salaries and Wages

Correct B. ₦5,000 debit to Salaries and Wages and ₦5,000 credit to Salaries and Wages Payable

C. ₦15,000 debit to Salaries and Wages Payable and ₦10,000 credit to Salaries and Wages

D. ₦15,000 debit to Salaries and Wages and ₦10,000 credit to Salaries and Wages Payable

Correct Answer: B

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Question 5

A company issues 5,000 debentures of ₦100 each at a premium of ₦20 per debenture. The issue expenses amount to ₦2,000. Prepare the journal entry to record the issue of debentures.

A. ₦500,000 credit to Debenture Capital and ₦2,000 debit to Issue Expenses

B. ₦500,000 credit to Debenture Capital and ₦2,000 credit to Debenture Premium

C. ₦500,000 credit to Debenture Premium and ₦2,000 debit to Issue Expenses

Correct D. ₦500,000 credit to Debenture Capital and ₦2,000 credit to Debenture Premium

Correct Answer: D

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Question 6

A company's trial balance shows a debit balance of ₦15,000 in the account 'Rent Received'. However, the company's accounting records show that it has not received any rent from its tenants. What is the correct treatment for this discrepancy?

A. Debit the Rent Received account and credit the Cash account

B. Credit the Rent Received account and debit the Cash account

Correct C. Debit the Rent Received account and credit the Profit or Loss account

D. Credit the Rent Received account and debit the Profit or Loss account

Correct Answer: C

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Question 7

A sole trader's cash book shows the following transactions:

A. ₦10,000

Correct B. ₦20,000

C. ₦30,000

D. ₦40,000

Correct Answer: B

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Question 8

A partnership has two partners, A and B. The partnership's trial balance shows a debit balance of ₦10,000 in the account 'A's Capital'. What is the correct treatment for this discrepancy?

Correct A. Debit the A's Capital account and credit the Profit or Loss account

B. Credit the A's Capital account and debit the Profit or Loss account

C. Debit the A's Capital account and credit the B's Capital account

D. Credit the A's Capital account and debit the B's Capital account

Correct Answer: A

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Question 9

A company's bank reconciliation statement shows a difference of ₦5,000 between the company's cash book balance and the bank statement balance. What is the correct treatment for this discrepancy?

Correct A. Debit the Cash account and credit the Bank account

B. Credit the Cash account and debit the Bank account

C. Debit the Profit or Loss account and credit the Cash account

D. Credit the Profit or Loss account and debit the Cash account

Correct Answer: A

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Question 10

A company's trial balance shows a credit balance of ₦15,000 in the account 'Dividends'. What is the correct treatment for this discrepancy?

A. Debit the Dividends account and credit the Profit or Loss account

Correct B. Credit the Dividends account and debit the Profit or Loss account

C. Debit the Dividends account and credit the Cash account

D. Credit the Dividends account and debit the Cash account

Correct Answer: B

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Question 11

A company's trading account for the year ended 31st December 2020 shows a profit of ₦1,500,000. The company's balance sheet as at 31st December 2020 shows a decrease in trade debtors of ₦250,000 and an increase in trade creditors of ₦300,000. Calculate the company's net cash inflow from trading activities.

Correct A. ₦1,200,000

B. ₦1,500,000

C. ₦1,800,000

D. ₦2,000,000

Correct Answer: A

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Question 12

A company issues 10,000 shares of ₦1 each at a premium of ₦0.50 per share. Calculate the total amount received from the issue of shares.

Correct A. ₦5,500,000

B. ₦5,000,000

C. ₦4,500,000

D. ₦4,000,000

Correct Answer: A

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Question 13

A company's manufacturing account for the year ended 31st December 2020 shows a direct material cost of ₦1,200,000, direct labour cost of ₦800,000, and an overhead cost of ₦500,000. Calculate the company's cost of goods sold.

Correct A. ₦2,500,000

B. ₦2,000,000

C. ₦1,500,000

D. ₦1,000,000

Correct Answer: A

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Question 14

A company's balance sheet as at 31st December 2020 shows a current ratio of 2:1. If the company's current assets are ₦1,500,000 and its current liabilities are ₦750,000, calculate the company's current assets.

Correct A. ₦1,500,000

B. ₦1,250,000

C. ₦1,000,000

D. ₦750,000

Correct Answer: A

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Question 15

A company's profit and loss account for the year ended 31st December 2020 shows a gross profit of ₦1,500,000 and an operating profit of ₦1,200,000. Calculate the company's net profit.

Correct A. ₦1,200,000

B. ₦1,500,000

C. ₦1,800,000

D. ₦2,000,000

Correct Answer: A

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Question 16

A company's trial balance shows a debit balance of ₦50,000 in the account 'Rent Received'. What is the correct treatment of this account in the preparation of the company's financial statements?

A. Debit the account in the balance sheet

Correct B. Credit the account in the balance sheet

C. Debit the account in the income statement

D. Credit the account in the income statement

Correct Answer: B

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Question 17

A company uses the straight-line method of depreciation. If the cost of the asset is ₦120,000 and its useful life is 5 years, what is the annual depreciation charge?

Correct A. ₦24,000

B. ₦20,000

C. ₦30,000

D. ₦18,000

Correct Answer: A

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Question 18

A company's balance sheet shows a current liability of ₦150,000. What is the correct classification of this liability?

A. Non-current liability

Correct B. Current liability

C. Equity

D. Asset

Correct Answer: B

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Question 19

A company's trial balance shows a credit balance of ₦20,000 in the account 'Dividends'. What is the correct treatment of this account in the preparation of the company's financial statements?

A. Debit the account in the income statement

Correct B. Credit the account in the income statement

C. Debit the account in the balance sheet

D. Credit the account in the balance sheet

Correct Answer: B

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Question 20

A company uses the double-declining balance method of depreciation. If the cost of the asset is ₦180,000 and its useful life is 5 years, what is the annual depreciation charge?

A. ₦30,000

Correct B. ₦36,000

C. ₦24,000

D. ₦18,000

Correct Answer: B

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Question 21

A company's trial balance shows a debit balance of ₦15,000 in the account 'Rent Received' and a credit balance of ₦20,000 in the account 'Rent Paid'. What is the correct journal entry to correct this discrepancy?

A. Debit Rent Paid by ₦5,000 and Credit Rent Received by ₦5,000

Correct B. Debit Rent Received by ₦5,000 and Credit Rent Paid by ₦5,000

C. Debit Rent Paid by ₦20,000 and Credit Rent Received by ₦20,000

D. Debit Rent Received by ₦20,000 and Credit Rent Paid by ₦20,000

Correct Answer: B

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Question 22

A manufacturing company uses a job order costing system. The company has the following costs: direct materials of ₦10,000, direct labor of ₦8,000, and overhead of ₦6,000. What is the total cost of production?

Correct A. ₦24,000

B. ₦24,000

C. ₦24,000

D. ₦24,000

Correct Answer: A

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Question 23

A government agency has the following transactions: a grant of ₦100,000, a loan of ₦50,000, and a donation of ₦20,000. What is the total amount of the agency's assets?

Correct A. ₦170,000

B. ₦170,000

C. ₦170,000

D. ₦170,000

Correct Answer: A

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Question 24

A company's balance sheet shows a current ratio of 2:1. If the company's current assets are ₦100,000 and its current liabilities are ₦50,000, what is the company's quick ratio?

Correct A. 1:1

B. 2:1

C. 3:1

D. 4:1

Correct Answer: A

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Question 25

A company's trial balance shows a debit balance of ₦15,000 in the account 'Rent Received' and a credit balance of ₦20,000 in the account 'Rent Paid'. What is the correct journal entry to correct this discrepancy?

A. Debit Rent Paid by ₦5,000 and Credit Rent Received by ₦5,000

Correct B. Debit Rent Received by ₦5,000 and Credit Rent Paid by ₦5,000

C. Debit Rent Paid by ₦20,000 and Credit Rent Received by ₦20,000

D. Debit Rent Received by ₦20,000 and Credit Rent Paid by ₦20,000

Correct Answer: B

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