Practice post utme wellspring university accounting 2021 Past Questions

Question 1

A company is considering the adoption of a new accounting system. The new system will cost ₦1,500,000 and will save the company ₦300,000 per year. If the company expects to operate for 5 years, what is the net present value of the new system?

A. ₦1,200,000

Correct B. ₦1,500,000

C. ₦1,800,000

D. ₦2,000,000

Correct Answer: B

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Question 2

A partnership has two partners, A and B. Partner A has a 60% interest in the partnership and partner B has a 40% interest. If the partnership has a net income of ₦1,200,000, how much will partner A receive as their share of the net income?

Correct A. ₦720,000

B. ₦800,000

C. ₦900,000

D. ₦1,000,000

Correct Answer: A

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Question 3

A company is preparing a balance sheet as of December 31, 2021. The company has the following assets and liabilities:

A. ₦1,500,000

Correct B. ₦2,000,000

C. ₦2,500,000

D. ₦3,000,000

Correct Answer: B

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Question 4

A company is preparing a statement of cash flows as of December 31, 2021. The company has the following cash inflows and outflows:

A. ₦1,000,000

B. ₦1,500,000

Correct C. ₦2,000,000

D. ₦2,500,000

Correct Answer: C

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Question 5

A company is preparing a budget for the upcoming year. The company has the following projected income and expenses:

A. ₦1,500,000

Correct B. ₦2,000,000

C. ₦2,500,000

D. ₦3,000,000

Correct Answer: B

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Question 6

A company's cash book shows a balance of ₦50,000. However, the bank statement shows a balance of ₦60,000. What is the likely reason for the discrepancy?

A. The company has not yet deposited the cash into the bank.

B. The company has not yet withdrawn the cash from the bank.

C. The bank has charged the company a service fee.

Correct D. The company has made an error in its cash book.

Correct Answer: D

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Question 7

A company's trading account shows a profit of ₦100,000. However, the profit and loss account shows a loss of ₦50,000. What is the likely reason for the discrepancy?

A. The company has made an error in its trading account.

Correct B. The company has made an error in its profit and loss account.

C. The company has not yet recorded the profit in the trading account.

D. The company has not yet recorded the loss in the profit and loss account.

Correct Answer: B

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Question 8

A company's balance sheet shows a total asset value of ₦500,000. However, the company's cash book shows a cash balance of ₦200,000. What is the likely reason for the discrepancy?

Correct A. The company has not yet recorded the cash in the balance sheet.

B. The company has not yet recorded the assets in the balance sheet.

C. The company has made an error in its balance sheet.

D. The company has made an error in its cash book.

Correct Answer: A

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Question 9

A company's cash book shows a balance of ₦100,000. However, the bank statement shows a balance of ₦120,000. What is the likely reason for the discrepancy?

A. The company has not yet deposited the cash into the bank.

B. The company has not yet withdrawn the cash from the bank.

C. The bank has charged the company a service fee.

Correct D. The company has made an error in its cash book.

Correct Answer: D

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Question 10

A company's trading account shows a profit of ₦200,000. However, the profit and loss account shows a loss of ₦100,000. What is the likely reason for the discrepancy?

A. The company has made an error in its trading account.

Correct B. The company has made an error in its profit and loss account.

C. The company has not yet recorded the profit in the trading account.

D. The company has not yet recorded the loss in the profit and loss account.

Correct Answer: B

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Question 11

A company's trial balance shows a debit balance in the suspense account of ₦15,000. The company's accountant has identified the following transactions that have not been recorded: a sale of goods for ₦20,000, a purchase of goods for ₦30,000, and a payment of ₦10,000 to a creditor. Prepare the necessary journal entries to correct the suspense account.

A. Debit Suspense Account ₦15,000, Credit Sales Account ₦20,000

B. Debit Purchases Account ₦30,000, Credit Suspense Account ₦30,000

Correct C. Debit Suspense Account ₦15,000, Credit Creditor Account ₦10,000

D. Debit Sales Account ₦20,000, Credit Suspense Account ₦20,000

Correct Answer: C

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Question 12

A company has the following assets: a building worth ₦50,000,000, a machine worth ₦20,000,000, and a vehicle worth ₦10,000,000. The company uses the straight-line method of depreciation. Calculate the annual depreciation for each asset.

Correct A. Building: ₦1,250,000, Machine: ₦83,333, Vehicle: ₦500,000

B. Building: ₦1,000,000, Machine: ₦50,000, Vehicle: ₦250,000

C. Building: ₦1,500,000, Machine: ₦100,000, Vehicle: ₦500,000

D. Building: ₦1,250,000, Machine: ₦83,333, Vehicle: ₦250,000

Correct Answer: A

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Question 13

A company has the following transactions: a sale of goods for ₦50,000, a purchase of goods for ₦30,000, and a payment of ₦20,000 to a creditor. Prepare the necessary journal entries.

Correct A. Debit Sales Account ₦50,000, Credit Purchases Account ₦30,000

B. Debit Purchases Account ₦30,000, Credit Sales Account ₦50,000

C. Debit Creditor Account ₦20,000, Credit Cash Account ₦20,000

D. Debit Sales Account ₦50,000, Credit Creditor Account ₦20,000

Correct Answer: A

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Question 14

A company has the following assets: a building worth ₦50,000,000, a machine worth ₦20,000,000, and a vehicle worth ₦10,000,000. The company uses the straight-line method of depreciation. Calculate the accumulated depreciation after 5 years.

A. Building: ₦2,500,000, Machine: ₦100,000, Vehicle: ₦500,000

B. Building: ₦2,000,000, Machine: ₦50,000, Vehicle: ₦250,000

C. Building: ₦3,000,000, Machine: ₦200,000, Vehicle: ₦1,000,000

Correct D. Building: ₦2,500,000, Machine: ₦100,000, Vehicle: ₦500,000

Correct Answer: D

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Question 15

A company has the following transactions: a sale of goods for ₦50,000, a purchase of goods for ₦30,000, and a payment of ₦20,000 to a creditor. Prepare the necessary journal entries.

Correct A. Debit Sales Account ₦50,000, Credit Purchases Account ₦30,000

B. Debit Purchases Account ₦30,000, Credit Sales Account ₦50,000

C. Debit Creditor Account ₦20,000, Credit Cash Account ₦20,000

D. Debit Sales Account ₦50,000, Credit Creditor Account ₦20,000

Correct Answer: A

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Question 16

A company's accounting records are incomplete due to a fire that destroyed its office. The company's accountant has managed to salvage some of the records, but they are not in a usable format. The accountant has estimated the company's total assets to be ₦5,000,000 and its total liabilities to be ₦2,000,000. The company's net income for the year was ₦750,000. Using the single-entry method, prepare a statement of financial position for the company.

A. ₦3,000,000

B. ₦4,000,000

Correct C. ₦5,000,000

D. ₦6,000,000

Correct Answer: C

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Question 17

A government agency is responsible for collecting taxes from citizens. The agency has a budget of ₦10,000,000, which is allocated as follows: ₦3,000,000 for salaries, ₦2,000,000 for office expenses, and ₦5,000,000 for capital expenditures. Using the public sector accounting principles, prepare a budget statement for the agency.

A. ₦3,000,000

B. ₦5,000,000

C. ₦7,000,000

Correct D. ₦10,000,000

Correct Answer: D

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Question 18

A manufacturing company produces two products: A and B. Product A requires 2 hours of labor and 1 hour of machine time, while product B requires 1 hour of labor and 2 hours of machine time. The company has a total of 100 hours of labor available and 120 hours of machine time available. Using the linear programming method, determine the optimal production levels for products A and B.

A. Product A: 50 units, Product B: 60 units

Correct B. Product A: 60 units, Product B: 50 units

C. Product A: 70 units, Product B: 40 units

D. Product A: 80 units, Product B: 30 units

Correct Answer: B

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Question 19

A company has two departments: A and B. Department A has a budget of ₦1,000,000, while department B has a budget of ₦500,000. The company's accountant has prepared the following departmental accounts: Department A: ₦800,000, Department B: ₦300,000. Using the departmental accounting method, prepare a statement of financial position for the company.

A. ₦1,300,000

B. ₦1,500,000

Correct C. ₦1,800,000

D. ₦2,000,000

Correct Answer: C

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Question 20

A company has a cash book that shows the following transactions: Cash received from customers: ₦500,000, Cash paid to suppliers: ₦200,000, Cash received from bank: ₦300,000. Using the cash book method, prepare a statement of cash flows for the company.

A. ₦600,000

B. ₦700,000

Correct C. ₦800,000

D. ₦900,000

Correct Answer: C

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Question 21

A company issued 10,000 shares of ₦ 1 each at a premium of ₦ 2.50 per share. The company also issued 5,000 ₦ 100 debentures at 5% interest. Calculate the total amount received from the issue of shares and debentures.

A. ₦ 25,000

Correct B. ₦ 30,000

C. ₦ 35,000

D. ₦ 40,000

Correct Answer: B

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Question 22

A partnership has two partners, A and B. The capital accounts of A and B are ₦ 10,000 and ₦ 8,000 respectively. The profit for the year is ₦ 12,000. If A's share of profit is ₦ 6,000, calculate B's share of profit.

A. ₦ 3,000

B. ₦ 4,000

Correct C. ₦ 5,000

D. ₦ 6,000

Correct Answer: C

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Question 23

A company purchased a machine for ₦ 15,000. The machine has a useful life of 5 years and a residual value of ₦ 2,000. Calculate the annual depreciation using the straight-line method.

A. ₦ 2,500

Correct B. ₦ 3,000

C. ₦ 3,500

D. ₦ 4,000

Correct Answer: B

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Question 24

A company issued 10,000 shares of ₦ 1 each at a premium of ₦ 2.50 per share. The company also issued 5,000 ₦ 100 debentures at 5% interest. Calculate the total amount received from the issue of shares and debentures.

A. ₦ 25,000

Correct B. ₦ 30,000

C. ₦ 35,000

D. ₦ 40,000

Correct Answer: B

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Question 25

A partnership has two partners, A and B. The capital accounts of A and B are ₦ 10,000 and ₦ 8,000 respectively. The profit for the year is ₦ 12,000. If A's share of profit is ₦ 6,000, calculate B's share of profit.

A. ₦ 3,000

B. ₦ 4,000

Correct C. ₦ 5,000

D. ₦ 6,000

Correct Answer: C

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